TIDMDOM
RNS Number : 8142H
Domino's Pizza Group PLC
01 August 2023
1 August 2023 LEI: 213800Q6ZKHAOV48JL75
This announcement contains Inside Information
Domino's Pizza Group Plc - Half year results for the 26 weeks
ended 25 June 2023
Continued growth from strong H1 orders, market share gains and
acceleration of new store openings
H1 23(1) H1 22(1) % change
System sales(2) GBP766.4m GBP710.5m +7.9%
---------- ---------- ---------
Total orders 35.4m 34.4m +2.8%
---------- ---------- ---------
Like-for-Like system sales growth
(exc.splits & VAT)(3, 4) +9.7% +2.4% -
---------- ---------- ---------
Group revenue GBP332.9m GBP278.3m +19.6%
---------- ---------- ---------
Underlying*(,5) EBITDA GBP68.7m GBP63.5m +8.2%
---------- ---------- ---------
Underlying*(,5) profit before tax GBP50.9m GBP50.9m +0.0%
---------- ---------- ---------
Statutory profit after tax GBP80.2m GBP42.1m +90.5%
---------- ---------- ---------
Underlying*(,5) basic EPS 9.5p 9.5p +0.0%
---------- ---------- ---------
Statutory basic EPS 19.3p 9.5p +103.2%
---------- ---------- ---------
Interim dividend per share 3.3p 3.2p +3.1%
---------- ---------- ---------
* Underlying excludes the GBP40.6m profit on disposal of the
German associate in H1 23. Further information within footnote
5.
Commenting on the results, Elias Diaz Sese, Interim CEO
said:
"We have delivered a strong first half of 2023 with continued
growth in orders and sales. Thanks to our alignment with our
brilliant franchise partners, we have been able to accelerate our
progress on the strategic initiatives set out at the beginning of
the year, with a significant acceleration in store openings,
greater app penetration and material improvements in delivery
times. Today's results are testament to the hard work of our
colleagues and franchise partners who have worked relentlessly to
ensure nobody delivers like Domino's.
"We are delighted to welcome Andrew Rennie as our new CEO, who
brings extensive experience from across the Domino's system. While
we continue to face a challenging and uncertain macroeconomic
environment, we remain confident in the many opportunities we see
for Domino's in 2023 and beyond as we continue to work towards our
purpose of delivering a better future through food people
love."
Financial highlights
-- Like-for-like system sales (exc. splits and VAT) up 9.7%, with Q2 up 8.6%
-- Group revenue, up 19.6% driven by an increase in system sales
volume, acceleration of store openings and the pass-through of food
costs
-- Underlying EBITDA +8.2% which includes GBP5.3m of previously
guided one-off technology platform costs(6) and no contribution
from Germany (H1 22: GBP1.8m)
-- Excluding the one-off technology platform costs, underlying EBITDA would have been up 16.5%
-- Underlying profit before tax flat primarily driven by higher
interest costs, following H2 22 refinancing
-- Statutory profit after tax +90.5%, driven by proceeds from
the disposal of the German associate, generating a profit of
GBP40.6m recorded in non-underlying results
-- Good free cash flow of GBP56.2m (H1 22: GBP36.8m), driven by
working capital management and robust trading momentum
-- Interim dividend of 3.3p per share, up 3.1%
-- GBP20m buyback announced on 4 May 2023, with GBP13.9m repurchased as at 28 July 2023
-- New GBP70m buyback programme, following disposal of German
associate, will commence when the current GBP20m programme has
completed
-- Net Debt(7) of GBP171.4m and a leverage ratio of 1.33x, below
our target Net Debt / EBITDA leverage range of 1.5x - 2.5x,
reflecting receipt of GBP79.9m from disposal of German associate in
June 2023
Operational and strategic highlights
-- Year-on-year UK takeaway market share gains: 7.3% in Q2
23(8,) up from 6.6% in Q2 22(8,) in a challenging consumer
environment
-- H1 total orders of 35.4m, up 2.8% vs. H1 22. Q2 23, 17.4 m orders up 2.8%
-- Collections grew to 12.2m orders, up 20.0% vs. H1 22. Q2 23 up 17.3%
-- Delivery orders down 4.4% vs. H1 22. Q2 23 down 3.9%
-- Material acceleration of new store openings as we continue to
reap the benefits of franchisee alignment
-- 29 in H1 23 with 11 franchise partners vs. 12 in H1 22 from 7 franchise partners
-- Pipeline is c.70% larger than in FY22 across 30 different franchisees
-- Continued digital progress with significant growth in app customers and orders
-- 7.9m active app customers, up 46% vs H1 22 and up 16% vs Q1 23
-- App penetration increases with app orders as a percentage of
online orders at 75.2% (+24.8ppts vs. Q2 22) and app downloads
+140% compared to H1 22
-- Successful roll-out on Just Eat platform complete and
continuing to deliver incremental customers and orders. Uber Eats
trial expected to commence in some stores in H1 24
-- H1 23 average delivery times now under 25 minutes as a result
of our franchise partners' focus on service and GPS rolled out to
1,179 stores
-- One-time investments in ecommerce and ERP projects largely complete by end of FY23
-- As previously announced, appointment of Andrew Rennie as
Chief Executive Officer ("CEO"), joins DPG today and will become
CEO on 7 August 2023
Current trading, outlook and guidance
The business has delivered a strong first-half performance in a
challenging market. Trading momentum is encouraging in the first
three weeks of H2 23 with like-for-like system sales excluding
split stores increasing by 7.9% with total orders up 2.3%. While
the market and consumer backdrop remains uncertain, as a result of
the strong first-half performance and current momentum, we now
expect to deliver FY23 Underlying EBITDA in a range of GBP132m -
138m(9) .
We remain focused on accelerating our execution, through five
key areas of focus: franchise partner profitability &
organisation, value for money, digital, convenience, and technology
platform projects. Our asset-light business model and value
proposition mean we are well placed to succeed in a challenging
trading environment, and we remain confident that we will make
further financial and strategic progress, and deliver increased
returns for our shareholders.
Our technical guidance for FY23 is as follows:
-- FY23 is a 53-week year
-- H2 22 benefitted from a GBP2.1m profit on sale of five corporate stores
-- H1 23 benefitted from a GBP2.3m profit on sale of a freehold property
-- Accounting treatment of technology platform costs to impact EBITDA by c.GBP9m
-- Underlying depreciation & amortisation of between GBP22m to GBP25m
-- Underlying interest (excluding foreign exchange movements) in the range of GBP14m to GBP16m
-- Estimated underlying effective tax rate of c.22% for the full year
-- Capital investment of c.GBP25m
-- Net Debt at year-end between GBP205m and GBP225m
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 as it forms part of domestic
law of the United Kingdom by virtue of the European Union
(Withdrawal) Act 2018, as amended (together, "MAR").
The person responsible for making this notification is Adrian
Bushnell, Company Secretary.
Contacts
For Domino's Pizza Group plc:
Investor Relations
Will MacLaren, Head of Investor Relations +44 (0) 7443 192
118
Media:
Tim Danaher, Emily Gainsford - Brunswick +44 (0) 207 404
5959
Results meeting
A results meeting and Q&A for investors and analysts will be
held at 10:45 BST today. The webcast and presentation can be
accessed by here and will also be available on the Results, Reports
and Presentations page of our corporate website.
In addition, we will replay the webcast and Q&A at 16:00 BST
today for North American based investors not able to join the live
presentation at 10:45 BST this morning. Please click here to
register.
About Domino's Pizza Group
Domino's Pizza Group plc is the UK's leading pizza brand and a
major player in the Irish market. We hold the master franchise
agreement to own, operate and franchise Domino's stores in the UK
and the Republic of Ireland. As of 25 June 2023, we had 1,288
stores in the UK and Ireland.
Cautionary statement
Certain statements made in this announcement are forward-looking
statements. Such statements are based on current expectations and
assumptions and are subject to a number of risks and uncertainties
that could cause actual events or results to differ materially from
any expected future events or results expressed or implied in these
forward-looking statements. Persons receiving this announcement
should not place undue reliance on forward-looking statements.
Unless otherwise required by applicable law, regulation or
accounting standard, Domino's does not undertake to update or
revise any forward-looking statements, whether as a result of new
information, future developments or otherwise.
Notes
(1) H1 23 is 26 weeks ended 25 June 2023. H1 22 is 26 weeks
ended 26 June 2022.
(2) System sales represent the sum of all sales made by both
franchised and corporate stores to consumers in UK & Ireland.
These are excluding VAT.
(3) An adjustment for the change in VAT rates described for
system sales relates to the impact of changes in the VAT applied on
hot takeaway food where the VAT inclusive price to customers did
not change. The VAT rate in the UK decreased from 20% to 5% on 15
July 2020, increased to 12.5% on 1 October 2021 and reverted back
to 20% on 1 April 2022. System sales are consistently reported on
an exclusive of VAT basis. However, where the inclusive of VAT
price of an order remained the same on a total basis to the
customer, over the period of reduced VAT the exclusive of VAT price
reported in system sales increased. This leads to an increase in
system sales from 15 July 2020 through to 31 September 2021 when
the VAT rate was reduced from 20% to 5%. From 1 October 2021, the
rate increased from 5% to 12.5%. Where the inclusive of VAT price
of an order remained the same on a total basis, this leads to a
decrease in system sales compared to the period from 15 July 2020
and an increase in system sales compared to the period before 15
July 2020. With the increase in VAT from 1 April 2022 back up to
20%, where the inclusive of VAT price remained the same to the
consumer, there has been a negative impact on system sales compared
to the period from 15 July 2020 - 31 September 2021 and 1 October
21 - 31 March 2022, as the exclusive of VAT price of an order
decreased.
As an example, for an order where the inclusive of VAT price is
GBP27:
-- From 15 July 2020 to 31 September 2021, during the period
where VAT was 5%, the reported system sale would be GBP25.71
-- From 1 October 2021 to 31 March 2022, during the period where
VAT was 12.5%, the reported system sale would be GBP24.00
-- From 1 April 2022 onwards, where the VAT rate is 20%, the
reported system sale would be GBP22.50
In Ireland, the VAT rate for hot takeaway food reduced from
13.5% to 9% on 1 November 2020 and remains in place. The Irish
government also confirmed that the temporary VAT rate reduction to
9% in the tourism and hospitality sectors will not be extended,
meaning the VAT rate will revert to 13.5% from 1 September
2023.
(4) Like-for-like (excluding splits) system sales performance is
calculated for UK & Ireland against a comparable 52-week period
in the prior period for mature stores which were not in territories
split in the current period or comparable period. Mature stores are
defined as those opened prior to 26th December 2021.
(5) Underlying is defined as statutory performance excluding
discontinued operations, and items classified as non-underlying
which includes significant non-recurring items or items directly
related to merger and acquisition activity and related instruments
as set out in note 4 to the financial information. For H1 23,
Underlying excludes the GBP40.6m profit on disposal of the German
associate.
(6) The technology platform costs relate to two new cloud-based
IT systems (a new ecommerce platform and a new ERP system) for
which the investment in these assets is required to be expensed
through the income statement. This treatment has no impact on cash
and is simply a reclassification from capital expenditure to
operating expenditure. As previously communicated, both systems are
part of our investment in growth and the ecommerce platform is part
of our growth investment framework agreed with our franchise
partners in December 2021. The accounting treatment of costs
incurred for the cloud-based IT solutions is in accordance with the
IFRS Interpretations Committee update in March 2021, which included
an agenda decision around the treatment of configuration and
customisation costs in a cloud computing arrangement involving
Software as a Service. Under this guidance, the costs incurred by
the Group on these elements of the platform is required to be
expensed as incurred.
(7) Net Debt is defined as the bank revolving facilities,
private placement facilities, cash and cash equivalents and other
loans, including balances held in disposal groups held for
sale.
(8) Kantar Worldwide Panel, bespoke market definition. Q2 23 is
12 weeks to 11 June 2023, Q2 22 is 12 weeks to 12 June 2022.
Takeaway market combines both Delivery and Collection.
(9) Current mean of FY23 Underlying EBITDA expectations is
GBP127.6m with a range of GBP125.0m - GBP129.2m, assumed to be on
52 week basis.. Based on 9 analysts' forecasts.
Performance summary
We have delivered a strong first-half performance in a
challenging market. Alignment with our world-class franchise
partners and the acceleration of our strategy resulted in record
order count and robust sales growth. Our focus on the five
strategic priorities for FY23 has resulted in our market share
increasing from 6.6% in Q2 22 to 7.3% in Q2 23.
Trading in H1 23 was strong, with like-for-like system sales,
excluding splits and the impact of VAT, up 9.7%. This is due to
working collaboratively with our franchise partners, focusing on
our five key priorities for the year and giving our customers great
service and value in a challenging market.
Underlying EBITDA was GBP68.7m, up 8.2% compared to H1 22,
driven by an increase in system sales volume, acceleration of store
openings and the pass-through of food costs. We incurred GBP5.3m of
previously guided technology platform costs in H1 23. Excluding
these, underlying EBITDA would have increased 16.5%.
Statutory profit after tax was GBP80.2m, up 90.5% on H1 22 as a
result of profit from the disposal of the German associate,
generating a profit of GBP40.6m recorded in non-underlying
results.
Free cash flow generated by the business was GBP56.2m, an
increase from GBP36.8m in H1 22 driven by increased EBITDA and
working capital management.
Net Debt decreased by GBP81.9m from the start of FY23 to
GBP171.4m with Net Debt/EBITDA leverage decreasing to 1.33x
(excluding IFRS 16) below our target Net Debt / EBITDA leverage
range of 1.5x - 2.5x, reflecting receipt of GBP79.9m from disposal
of German associate in June 2023.
The continued strong performance of the business means that, in
line with our capital allocation framework, we will pay an interim
dividend of 3.3p, a 3.1% increase compared to the prior year.
Following the disposal of the German associate, a new GBP70m
buyback programme will commence when the current GBP20m programme
has completed.
Strong strategic progress in H1 23
We are very pleased with the strategic progress we have made and
are resolutely focused on accelerating the execution of our
strategy. As we have previously outlined, we have five key enablers
which will drive this acceleration:
1. Franchise partner profitability / Organisation
As we outlined at our FY22 results in March, our priority this
year is to work with our franchise partners to help improve their
store profitability. We are making good progress, with average
store EBITDA broadly flat in H1 23 vs H1 22 after adjusted for VAT,
despite significant inflationary pressures. We have focused on
continuing to invest in growth, in line with the framework we
agreed with our franchise partners in December 2021; working with
our suppliers to look for efficiencies; developing revenue
management initiatives and driving operational efficiencies.
Our franchise partners have delivered an outstanding performance
in challenging market conditions, and we are benefitting from a
system which is aligned. In H1 23, our franchise partners have
delivered great value to customers through two successful national
campaigns, benefitted from the roll-out on Just Eat, delivered
material improvements in service and accelerated our new store
openings.
We have supported our franchise partners with incentives to
accelerate new store rollouts, continued the food cost rebate
mechanism and undertaken a dedicated programme of national
roadshows focused on improving service and quality of product. We
have worked closely with key suppliers to ensure we have optimal
stock cover and to minimise cost inflation where possible for our
franchise partners. Our world-class supply chain continues to
deliver outstanding performance. We maintained 99.9% availability
and 99.8% accuracy in a period of challenging market
conditions.
Based on the unaudited data submitted to us by franchise
partners, average store EBITDA for all UK stores in H1 23 was
approximately GBP76k, equivalent to a 13% EBITDA margin. This
compares to GBP79k or 14% EBITDA margin achieved in H1 22, when
adjusted for VAT, and GBP70k or 14% EBITDA margin achieved in H1
19.
In July we announced the appointment of Andrew Rennie as CEO
with effect from 7 August 2023. Andrew has an extensive career in
the Domino's global system, a deep knowledge of the brand,
extensive experience of working with franchisees, and was himself a
very successful multi-unit franchisee for a decade. We have
reshaped our Executive leadership team to ensure that we are
leaner, and can make faster decisions. We have also undertaken a
wider review and restructure of our organisation to focus on
increasing agility, focus and profitability. As part of the review
of the organisation we have prioritised talent development to
nurture and develop future leaders of the business. Together with
our franchisee partners, we are now able to act more quickly to the
changes in the market that we are seeing.
2. Value for Money
Our strong value message continues to resonate with consumers,
and our focus on value for money is essential in the current
trading environment. We started the year with a strong value offer
with our successful 'Price Slice' deal in the UK which had GBP8,
GBP10, GBP12 price points for small, medium and large pizzas. In Q2
23 we launched a 50% off app-only deal which gave customers great
value and drove more customers to our app. These deals were a
strong contributor to our performance in H1 23 and we will continue
to provide innovative deals offering our customers compelling
value.
We continue to aspire to return our delivery orders to growth in
FY23 and to reduce the average delivery time for our customers. We
are making good progress, with the trajectory of delivery orders
improving, down 3.9% in Q2 23, an improvement on the previous four
quarters. Customer service performance, including average delivery
times and percentage of deliveries on time, improved significantly
in H1 23 relative to H2 22 and H1 22. Average delivery times were
under 25 minutes in H1 23 compared to over 26 minutes in H1 22. We
continue to improve our delivery experience for our customers and
franchise partners. In H1 23, we continued the roll out of our
enhanced GPS solution which is now live in 1,179 stores and it will
be fully deployed by the end of 2023. This will help stores manage
labour through more efficient driver route planning and better
co-ordination with the store, as well as allowing drivers to use
their own device. It also enables customers to see exactly where
their order is and provide an accurate delivery time.
We aim to attract and retain new customers through a strong
pipeline of new pizzas, sides and desserts, and to increase order
frequency through innovation of our core menu. In January we
launched Vegan American Hot to coincide with Veganuary, to offer
further choice to our Vegan and Flexitarian customers. This was
followed by the launch of the Ultimate Chicken Mexicana, which was
our best-selling innovation in the last five years. We have also
launched three live store trials for 'Domishakes', wraps and
'Italianos' across multiple franchise groups to test new products
which will expand our menu, drive spend and attract new customers.
The trials are performing ahead of expectations, showing
opportunities for future growth.
3. Digital
We have seen a step change in our digital progress. The Domino's
app is the key driver of our digital growth strategy and will be a
material contributor to future system sales growth.
Orders generated through our app grew 37.3% in H1 23, and app
orders as a percentage of online orders were 75.2% in Q2 23, an
increase of 24.8ppts vs. Q2 22 and 10.9ppts vs Q1 23. App downloads
were 140% higher vs. H1 22 and the number of active app customers
reached 7.9m, an increase of 46% compared to H1 22.
App customers are particularly important to us because in the
last 12 months, customers who only use the app yield 43% higher
sales per customer than those who only use the website. In
addition, customers who only used the app in the last 12 months had
an average order frequency 51% higher than web-only customers.
Attracting more orders through the app continues to be a key focus
in 2023.
4. Convenience
We have seen a significant acceleration in our new store
openings. We opened 29 new stores in H1 23 with 11 different
franchise partners compared to 12 in H1 22 from 7 different
franchise partners. This acceleration is a result of rebuilding our
store-opening pipeline with our franchise partners and the
continued opportunity we see for growing the store estate in the UK
and Ireland. We currently have 6 stores under construction and a
further 25 with planning permission. Our combined openings and
pipeline is c.70% larger than in FY22, more than 30 franchisees
have stores in development this FY and we continue to expect new
store openings in FY23 to increase the total store estate by
mid-single digits percentage points. Importantly, we already have
over 25 stores in development for FY24 and the pipeline continues
to strengthen. We remain on track to open at least 200 stores over
the medium term.
Domino's has now been rolled out on the Just Eat platform for
two full quarters. We are focused on continuing to drive
incremental customers and orders and look forward to a full year
benefit of being on the platform. Following Domino's Pizza Inc.'s
global agreement with Uber, DPG expects to start a trial in some
stores in H1 24. The data-led trial will enable some customers to
order Domino's Pizza via the Uber Eats platform, but the pizzas
will be delivered by our own Domino's delivery drivers, which is
the same approach as in our relationship with Just Eat. The trial
would complement our existing partnership with Just Eat and will
enable us to fully understand if there are benefits for our
customers, our franchise partners, and our business in partnering
with two platforms in the UK and Ireland.
5. Technology platform projects
In H2 22 we started work on two important technology projects .
First, we began work on our new ecommerce platform which will
deliver significant benefits to our franchise partners and
ultimately provide an enhanced experience for our customers. The
new platform will provide us with a scalable and best in class
ecommerce back end. It will enable us to deliver improvements
quickly and significantly more cost efficiently than our current
platform. This will also enable more agile marketing and promotions
to be put in place, build a resilient platform for our next stage
of growth and enable us to introduce a loyalty platform. The
ecommerce platform is on track and is expected to complete by the
end of FY23, enabling us to be able to offer a loyalty programme to
customers in FY24.
Secondly, we began work on a new ERP system which will enable us
to improve processes across our business and generate efficiencies
in our supply chain. The ERP system remains on track for launch in
H1 24.
As previously guided, operating expenditure in FY23 is elevated
by c.GBP9m of one-time spend related to the implementation of these
projects, with the remaining ERP implementation expenditure
expected to be in the low single digit millions in FY24. Capital
expenditure relating to the implementation in FY23 is similarly
elevated by c.GBP5m of one-time spend which is not expected to
repeat in FY24.
Delivering our sustainable future
Our corporate purpose is to Deliver a Better Future Through Food
People Love. In H1 23, we were pleased to publish our 'Connect the
Dots' sustainability strategy, which sets out our joined-up
approach across the business to achieve our sustainability goals.
The strategy has five key pillars which we are already making good
progress against. This includes the ongoing trial of our 650
calorie Cheeky Little Pizzas under the pillar of giving customers
more choice, and the opening of our first lower carbon store in
Hammersmith, to support our environmental impact pillar. We look
forward to updating further on our progress in the Group's first
sustainability report in early 2024.
H1 23 trading review
Continued underlying like-for-like system sales growth
System sales represent all sales made by both franchised and
corporate stores to consumers. Total system sales were GBP766.4m,
up 7.9% on H1 22. Like-for-like system sales across UK &
Ireland increased by 6.3%, excluding split stores, or by 5.3%
including splits. Like-for-like system sales, excluding splits and
the different VAT rate in Q1 22, increased by 9.7%. The VAT rate
reverted to 20% on 1 April 2022, and therefore from the start of Q2
23, there is no VAT impact when comparing quarterly performance to
the prior year.
Q1 Q2 H1 Q1 Q2 H1
UK & ROI 2023 2023 2023 2022 2022 2022
LFL inc. splits 3.5% 7.3% 5.3% (3.6)% (11.4)% (7.5)%
------- ------- ------- ------- -------- -------
LFL exc. splits 4.4% 8.4% 6.3% (2.4)% (10.4)% (6.4)%
------- ------- ------- ------- -------- -------
VAT rate 20% 20% - 12.5% 20% -
------- ------- ------- ------- -------- -------
LFL inc. splits
and exc. VAT 9.8% 7.5% 8.6% 2.7% (0.2)% 1.2%
------- ------- ------- ------- -------- -------
LFL exc. splits
and exc. VAT 10.7% 8.6% 9.7% 3.9% 0.9% 2.4%
------- ------- ------- ------- -------- -------
Our trading in H1 23 was driven by our key areas of focus;
giving customers' value for money through compelling national value
campaigns and our franchise partners' focus on service; our digital
acceleration, the continued incremental benefit of being on the
Just Eat platform and new store openings.
The quarterly analysis of this performance, as well as the VAT
rate for each period is in the table above.
UK & ROI LFL inc. splits (YOY Growth) Total (All Stores)
Sales Volume Price Orders (m) YOY Order
Growth
---------- ----------- -------- ----------- ----------
Total
---------- ----------- -------- ----------- ----------
Q1 3.5% (7.2)% 10.7% 18.0m 2.8%
---------- ----------- -------- ----------- ----------
Q2 7.3% (6.0)% 13.2% 17.4m 2.8%
---------- ----------- -------- ----------- ----------
H1 5.3% (6.6)% 11.9% 35.4m 2.8%
---------- ----------- -------- ----------- ----------
Delivery only
---------- ----------- -------- ----------- ----------
Q1 (0.9)% (12.3)% 11.4% 12.1m (4.9)%
---------- ----------- -------- ----------- ----------
Q2 2.9% (9.8)% 12.7% 11.1m (3.9)%
---------- ----------- -------- ----------- ----------
H1 0.9% (11.1)% 12.0% 23.2m (4.4)%
---------- ----------- -------- ----------- ----------
Collection only
---------- ----------- -------- ----------- ----------
Q1 22.5% 12.4% 10.1% 5.9m 23.0%
---------- ----------- -------- ----------- ----------
Q2 24.0% 6.6% 17.4% 6.3m 17.3%
---------- ----------- -------- ----------- ----------
H1 23.3% 9.4% 13.9% 12.2m 20.0%
---------- ----------- -------- ----------- ----------
Total orders in the period grew by 2.8%. This was driven by a
20.0% growth in collection orders, offset by a 4.4% decline in
delivery orders.
Collections continued to show strong growth in Q2, up 17.3%.
Collection represents the most efficient labour channel, with
delivery effectively outsourced to the customer and collection
volumes are now 120% of 2019 levels. Delivery orders were down 3.9%
in the quarter, an improvement on the previous four quarters.
Corporate stores
In Q4 22, we sold five corporate stores to an existing franchise
partner. In H1 23 corporate stores revenue decreased by GBP1.2m to
GBP16.4m as a result of the lower number of stores. Excluding these
stores, revenue would be up GBP1.1m over H1 22. Corporate stores
EBITDA was GBP0.5m, GBP0.6m lower than H1 22 due to the comparator
period having a VAT benefit in Q1 22 and the disposal of five
stores. Following the sale of these stores, we now directly operate
31 stores in the London area.
German associate
Completion of the disposal of our German associate occurred on 5
June 2023. GBP79.9m of proceeds were received, comprising a put
option exercise price of GBP70.6m and the repayment of a GBP9.3m
loan. Following the exercise of the put option on 10 November 2022
there was no contribution from the German associate in H1 23 (H1
22: GBP1.8m).
GBP398m returned to shareholders since Capital Allocation
Framework launched
We have a highly cash-generative, asset-light business model
and, in March 2021, we launched a new capital allocation framework.
Our first priority is to invest in the business to drive long-term
organic growth. We will continue to maximise shareholder returns
through a sustainable and progressive dividend and operate a
disciplined approach to assessing additional growth opportunities.
Finally, operating within a normalised leverage range of 1.5x -
2.5x net debt to Underlying EBITDA, we aim to maximise returns with
an annual allocation of surplus cash to shareholders. Since
launching the framework, we have announced GBP398m of returns to
shareholders, through GBP142m in dividends and GBP256m in share
buybacks.
In the half, we generated GBP56.2m of free cash. We have
invested GBP11.3m in capital investment in our core business and
will pay an interim dividend of 3.3p which represents a 3.1%
increase compared to the 2022 interim dividend. We announced a
GBP20m share buyback in May 2023 and as at 28 July 2023 GBP13.9m of
the programme had been executed.
Following the disposal of the German associate, a new GBP70m
buyback programme will commence when the current GBP20m programme
has completed.
Financial review
-- Underlying profit before tax of GBP50.9m, in line with H1
FY22, with increased trading profits offset with a GBP3.7m increase
in net interest charges and lower contributions from
investments.
-- Statutory profit after tax of GBP80.2m, up from GBP42.1m
primarily as a result of the disposal of the investment in the
German associate which generated a non-underlying profit on
disposal of GBP40.6m.
-- Free cash flow increased by GBP19.4m to an inflow of
GBP56.2m, as the EBITDA generated increased and working capital
benefited from the reversal of outflows incurred in FY22 as a
result of timing differences.
-- Overall net debt decreased by GBP81.9m largely as a result of
the GBP79.9m cash received on the disposal of the Investment in the
German associate which was offset against dividends, share buy
backs and capital expenditure.
26 weeks ending 26 weeks ending
25 June 26 June
2023 2022
GBPm GBPm
Group revenue 332.9 278.3
Underlying EBIT before contribution of investments 56.8 49.7
Contribution of investments 1.7 3.3
German associate contribution - 1.8
Underlying EBIT 58.5 54.8
Underlying net finance costs (7.6) (3.9)
Underlying profit before tax 50.9 50.9
Underlying tax charge (11.3) (8.8)
Underlying profit after tax 39.6 42.1
Non-underlying items - profit on Germany disposal 40.6 -
Statutory profit after tax 80.2 42.1
---------------------------------------------------- ---------------- ----------------
EBITDA reconciliation
Underlying EBITDA 68.7 63.5
Depreciation and amortisation (10.2) (8.7)
Group Underlying EBIT 58.5 54.8
We are pleased to have delivered strong financial performance in
the half year, despite the costs incurred investing in the
technology platforms. Underlying EBIT increased by GBP3.7m to
GBP58.5m due to higher supply chain growth driven by annualization
on price increases from the prior year. Statutory profit after tax
increased to GBP80.2m from GBP42.1m, primarily due to the profit on
disposal of the Investment in the German associate which is treated
as a non-underlying item.
Revenue
Our key metric for measuring the revenue performance of the
Group is system sales, rather than our Group revenue. System sales
are the total sales to end customers through our network of stores,
for both franchise partners and corporate stores. Our Group revenue
consists of food and non-food sales to franchise partners,
royalties paid by franchise partners, contributions into the NAF
and eCommerce funds, property income and end-customer sales in our
corporate stores.
Within our Group revenue, the volatility of food wholesale
prices, together with the combination of different revenue items,
means that analysis of margin generated by the Group is less
comparable than an analysis based on system sales. We consider that
system sales provide a useful alternative analysis over time of the
health and growth of the business.
Reported system sales in the period were GBP766.4m, up 7.9% due
to growth in order count alongside ticket increases.
26 weeks ended 26 weeks ended
25 June 2023 26 June 2022
GBPm GBPm
Supply Chain revenue 235.7 190.7
Royalty, rental & other revenue 41.9 38.1
Corporate Stores revenue 16.4 17.6
NAF & eCommerce 38.9 31.9
Total 332.9 278.3
--------------------------------- --------------- ---------------
Reported revenue increased by GBP54.6m, an increase of 19.6%,
primarily driven by increases in supply chain revenue as a result
of increased food costs, which are passed through to our franchise
partners.
Royalty, rental and other revenues primarily relate to the
royalty revenue we receive from our franchise partners based on a
percentage of system sales and rental income. This increased by
GBP3.8m mainly due to higher system sales.
Revenue for our directly operated corporate stores in London
decreased by GBP1.2m due to lower number of stores as a result of
the disposal of 5 stores at the end of 2022. Excluding these
stores, revenue would be up GBP1.1m over prior year. NAF and
eCommerce revenue was up GBP7.0m due to increased spend in the
period, as revenue is recognised based on costs incurred at nil
profit.
Underlying earnings before interest and taxation
Underlying EBIT increased by GBP3.7m to GBP58.5m. This is driven
by a GBP11.0m increase in underlying trading and a benefit of
GBP2.3m relating to the sale of freehold property, offset with
GBP6.3m of technology platform costs, GBP1.8m lower contributions
from the German associate, GBP1.0m due to prior year uplift in the
investment in Shorecal and GBP1.5m increase in depreciation and
amortisation.
The Group's continuing investment in two technology platform
projects, the eCommerce platform replacement and the new ERP
system, resulted in a total cost of GBP5.3m recognised within EBIT.
These costs are explained further below.
As a result of the Group exercising our option to sell our
investment in the German Associate, we ceased accounting for our
share of profits from the exercise date. This resulted in no
contributions being accounted for in the period, which is a GBP1.8m
decrease on prior year.
During the current period there was no benefit in the
revaluation of the Investment in Shorecal which resulted in a
GBP1.0m benefit in the prior year.
Technology platform costs
Profit Capital expenditure
EBITDA Amortisation before tax
GBPm GBPm GBPm GBPm
----------------------- -------- -------------- ----------- -------------------
ERP (3.7) (0.7) (4.4) -
eCommerce platform (1.6) (0.3) (1.9) (2.9)
----------------------- -------- -------------- ----------- -------------------
Total investment costs (5.3) (1.0) (6.3) (2.9)
----------------------- -------- -------------- ----------- -------------------
During the year, we continued to develop and implement two new
cloud-based IT systems, an eCommerce platform and an ERP
system.
These projects will enable us to capture growth in the future
and drive further efficiencies. The eCommerce platform costs are
part of the growth investment framework agreed with our franchise
partners in December 2021.
The total costs recognised in underlying profit before tax
relating to these projects was GBP6.3m.
Within EBITDA, costs of GBP5.3m have been recognised, of which
GBP3.7m relates to the ERP, and GBP1.6m relates to the eCommerce
platform. These represent costs spent on development of these
assets, which are expensed through the income statement rather than
capitalised as intangible assets, as they relate to cloud
platforms. For the ERP, this represents the full spend on the
project in period.
For the eCommerce platform, this relates to the percentage spent
on the cloud-based element of the project. An additional GBP2.9m
has been recorded in capital expenditure relating to the eCommerce
platform. Within amortisation, a total cost of GBP1.0m is
recognised. This consists of GBP0.7m relating to the ERP for
accelerated depreciation of the current platform, and GBP0.3m
relating to the eCommerce platform.
The ecommerce platform is on track and is expected to be
complete by the end of FY23, enabling us to offer a loyalty
programme to customers in FY24. The ERP system is on track to be
launched in H1 24.
Interest
Net underlying finance costs in the period were GBP7.6m, an
increase of GBP3.7m. In July 2022, the Group successfully
refinanced the existing revolving credit facility with a facility
limit of GBP200m and issued GBP200m private placement notes at a
fixed rate of 4.26%. The increase in the fixed borrowing rate,
together with the increase in variable rates under the revolving
credit facility, largely contributed to the increase, together with
an overall increase in net debt during the year.
Taxation
The underlying effective tax rate for H1 23 was 22.2% (H1 22:
17.3%), which is lower than the UK statutory rate of 25% effective
from April 2023, due to the contribution of joint ventures,
associates and investments.
Profit after tax and non-underlying items
Underlying profit after tax from continuing operations was
GBP80.2m, an increase from GBP42.1m in H1 2022 due to the GBP40.6m
profit on disposal of the Investment in the German associate which
has been classified under non-underlying during the period.
Proceeds of GBP70.6m were received for the investment with a book
value of GBP32.4m, which together with a currency translation gain
of GBP2.5m and professional fees of GBP0.1m resulted in the profit
on disposal of GBP40.6m.
Earnings per share
Underlying basic EPS was flat at 9.5p, as the decrease in
underlying profit after tax was offset with a lower number of
weighted average shares due to the share buyback programmes.
Statutory EPS increased to 19.3p from 9.5p, largely due to the
profit on disposal of the investment in the German associate.
Free cash flow and Net Debt
26 weeks ended 26 weeks ended
25 June 2023 26 June 2022
GBPm GBPm
------------------------------------------------------------------------------- --- --------------- ---------------
Underlying EBITDA 68.7 63.5
Add back non-cash items
* Contribution from investments (1.7) (5.1)
(1.0) 1.0
* Other non-cash items
Working capital 10.2 (11.2)
IFRS 16 - net lease payments (3.1) (3.8)
Dividends received 1.8 3.9
Net interest (7.1) (2.2)
Corporation tax (11.6) (9.3)
Free cash flow 56.2 36.8
------------------------------------------------------------------------------------ --------------- ---------------
Capital expenditure (11.3) (7.5)
Repayment from German associate 9.3 0.8
Market Access fee proceeds - 8.6
Disposals 70.6 0.6
Disposal of property, plant and equipment 4.4 -
Dividends (28.3) (30.0)
Share buyback (17.1) (42.5)
Share transactions - EBT (1.9) (3.3)
------------------------------------------------------------------------------------ --------------- ---------------
Movement in Net Debt 81.9 (36.5)
------------------------------------------------------------------------------------ --------------- ---------------
Opening Net Debt (253.3) (199.7)
Movement in capitalized facility arrangement fee (0.3) -
Forex on net debt 0.3 (0.2)
------------------------------------------------------------------------------------ --------------- ---------------
Closing Net Debt (171.4) (236.4)
Last 12 months Net Debt/EBITDA ratio from continuing operations (excl. IFRS 16) 1.33x 1.95x
------------------------------------------------------------------------------------ --------------- ---------------
Last 12 months Net Debt/EBITDA ratio from continuing and discontinued operations
(excl. IFRS
16) 1.33x 1.99x
------------------------------------------------------------------------------------ --------------- ---------------
Net debt decreased by GBP81.9m during the period to GBP171.4m,
with a free cash flow generated of GBP56.2m and GBP79.9m received
from the disposal of the Investment in the German associate. This
was offset with capital expenditure of GBP11.3m and returns to
shareholders through dividends of GBP28.3m and share buybacks of
GBP17.1m.
Free cash flow was GBP56.2m, an increase of GBP19.4m on the
previous year. Underlying EBITDA was GBP68.7m, an increase of
GBP5.2m due to higher gross profit as a result of higher supply
chain growth driven by annualization on price increases from the
prior year.
The working capital inflow of GBP10.2m (H1 22: outflow of
GBP11.2m) was primarily due to the reversal of the prior year
working capital outflow of which GBP4.4m relates to decrease in
debtors, GBP5.2m inflow relating to the timing of creditor payments
at year end, inflow of GBP3.6m due to higher accruals balances, and
lower inventory levels of GBP3.7m due to higher stock holding at
year end. This was offset with an outflow of GBP6.3m due to the
unwind of the timing of cash receipts and payments for online sales
following the strong performance in the final week of FY22.
Net IFRS 16 lease payments decreased in the period from GBP3.8m
to GBP3.1m based on the timing of rental payments. Dividends
received decreased from GBP3.9m to GBP1.8m, which includes a
dividend received of GBP1.0m from our investments in associates and
joint ventures as well as GBP0.8m from our investment in
Shorecal.
Net interest payments of GBP7.1m increased from GBP2.2m as a
result of increased interest charges on the new debt facilities put
in place in July 2022 and timing of interest payments on the
private placement loans, with the first six-monthly payment paid in
January 2023.
Capital expenditure increased to GBP11.3m from GBP7.5m, as we
continued our investment in the Group. Of this amount GBP4.4m
relates to investment in eCommerce and GBP2.1m relates to
development and expansion of our supply chain centre in
Ireland.
In June 2023, the Group received GBP79.9m for the disposal of
the German associate, of which GBP70.6m relates to the disposal of
the investment and GBP9.3m relates to the repayment of a loan.
Disposal of property, plant and equipment of GBP4.4m relates to
the disposal of freehold property.
The share buyback cash outflow of GBP17.1m includes the
remaining GBP8.9m of the GBP20.0m share buyback programme announced
in November 2022, and GBP8.2m relates to the GBP20.0m programme
announced in May 2023.
Capital employed and balance sheet
At 25 June 2023 At 25 December
GBPm 2022
GBPm
-------------------------------------------------- ------------------ -----------------
Intangible assets 29.7 30.0
Property, plant and equipment 96.8 96.5
Investments, associates and joint ventures 36.3 36.7
Deferred consideration 0.3 0.3
Right-of-use assets 19.1 21.3
Net lease liabilities (21.3) (23.4)
Provisions (15.3) (15.3)
Working capital (45.5) (27.9)
Net Debt (continuing operations) (171.4) (253.3)
Share buyback obligation (11.9) (8.9)
Tax (1.8) (1.7)
Held within assets and liabilities held for sale - 32.9
Net liabilities (85.0) (112.8)
-------------------------------------------------- ------------------ -----------------
Intangible assets decreased by GBP0.3m to GBP29.7m, as additions
of GBP4.8m on software assets were offset with amortisation of
GBP5.1m.
Property, plant and equipment increased by GBP0.3m to GBP96.8m
due to increased capital spend associated with our supply chain
centre in Ireland and the installation of solar panels across our
supply chain centres. This spend was offset against depreciation of
GBP2.5m and the disposal of freehold property of GBP1.9m during the
period.
Investments, associates and joint ventures decreased by GBP0.4m
due to trading performance of our associates and joint ventures
offset with the dividends received. This includes a GBP0.8m
dividend received from the Investment in Shorecal.
Right of use assets of GBP19.1m represents the lease assets for
our corporate stores, warehouses and equipment leases recognised
under IFRS 16 in the current period. The net lease liability is
GBP21.3m (25 December 2022: GBP23.4m). There have been no
significant changes in the lease portfolio during the period.
Working capital has increased by GBP17.6m to a net working
capital liability of GBP45.5m. The decrease is greater than the
movement in free cash flow due to decreased trade and other
receivables as a result of the loan to the German associate being
settled during the period.
Net debt has decreased to GBP171.4m for the reasons set out in
the free cash flow section above. As set out above, there remains a
GBP11.9m of outstanding share buyback obligation which is the
remaining amounts committed under the GBP20m share buyback
programme announced in May 2023.
During the period, the German associate, treated as an asset
held for sale, was sold for a consideration of GBP70.6m.
Total equity has increased by GBP27.8m, to a net liability
position of GBP85.0m, largely due to the profit on disposal of the
German associate offset with dividend payments and share buybacks.
There are sufficient distributable reserves in the standalone
accounts of Domino's Pizza Group plc for the proposed dividend
payment and announced share buyback.
Treasury management
The Group holds GBP400m in debt facilities of which GBP200m
relates to US Private Placement loan notes that mature on 27 July
2027 and GBP200m relates to an unsecured multi-currency revolving
credit facility which has an original term of three years to 27
July 2025 with the option of submitting two extension notices to
extend the facility, each by a period of 12 months. The total
undrawn facility as at 25 June 2023 was GBP189.1m.
We ended the period with Net Debt of GBP171.4m, and last 12
months Net Debt/EBITDA ratio on a continuing basis excluding the
impact of IFRS 16 decreased to 1.33x from 1.95x, as a result of
increased EBITDA performance in the year and a lower Net Debt
level.
Group income statement
Note 52 weeks ended 25 December 2022
26 weeks ended 25 June 2023 26 weeks ended 26 June 2022 GBPm
GBPm GBPm
----------------- ----- --------------------------------------- --------------------------------------- -----------------------------------------
Underlying Non-underlying* Total Underlying Non-underlying* Total Underlying Non-underlying* Total
----------------- ----- ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
Revenue 3 332.9 - 332.9 278.3 - 278.3 600.3 - 600.3
Cost of sales (179.7) - (179.7) (151.6) - (151.6) (326.8) - (326.8)
----------------- ----- ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
Gross profit 153.2 - 153.2 126.7 - 126.7 273.5 - 273.5
Distribution
costs (19.0) - (19.0) (18.5) - (18.5) (39.5) - (39.5)
Administrative
costs (79.7) - (79.7) (58.5) - (58.5) (131.8) - (131.8)
Share of
post-tax
profits of
associates and
joint ventures 1.7 - 1.7 4.1 - 4.1 6.6 - 6.6
Other income 10 2.3 40.6 42.9 1.0 - 1.0 1.0 - 1.0
Profit before
interest and
taxation 58.5 40.6 99.1 54.8 - 54.8 109.8 - 109.8
Finance income 5 6.6 - 6.6 6.4 - 6.4 13.1 - 13.1
Finance costs 6 (14.2) - (14.2) (10.3) - (10.3) (24.0) - (24.0)
----------------- ----- ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
Profit before
taxation 50.9 40.6 91.5 50.9 - 50.9 98.9 - 98.9
Taxation 7 (11.3) - (11.3) (8.8) - (8.8) (17.3) - (17.3)
----------------- ----- ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
Profit for the
period 39.6 40.6 80.2 42.1 - 42.1 81.6 - 81.6
----------------- ----- ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- --------
*Non-underlying items are disclosed
in note 4.
Earnings per
share
- Basic (pence) 8 9.5 19.3 9.5 9.5 18.8 18.8
----------------- ----- ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
- Diluted
(pence) 8 9.5 19.2 9.5 9.5 18.7 18.7
----------------- ----- ----------- ---------------- -------- ----------- ---------------- -------- ----------- ---------------- ----------
26 weeks ended 25 June 2023
Group statement of comprehensive income
26 weeks ended 25 June 2023
26 weeks 26 weeks 52 weeks
ended ended ended
25 June 26 June 25 December
2023 2022 2022
Note GBPm GBPm GBPm
----------------------------------------------- ----- --------- --------- -------------
Profit for the period 80.2 42.1 81.6
----------------------------------------------- ----- --------- --------- -------------
Other comprehensive (expense)/income:
Items that may be subsequently reclassified
to profit or loss:
- Exchange (loss)/gain on retranslation
of foreign operations (0.7) 0.2 1.5
- Transferred to income statement on disposal 13 (2.5) - -
----------------------------------------------- ----- --------- --------- -------------
Other comprehensive (expense)/income for
the period, net of tax (3.2) 0.2 1.5
----------------------------------------------- ----- --------- --------- -------------
Total comprehensive income for the period 77.0 42.3 83.1
----------------------------------------------- ----- --------- --------- -------------
Group balance sheet
At 25 June 2023
26 weeks 26 weeks 52 weeks
ended ended ended
25 June 26 June 25 December
2023 2022 2022
Note GBPm GBPm GBPm
-------------------------------------------------- ----- --------- --------- -------------
Non-current assets
Intangible assets 10 29.7 34.5 30.0
Property, plant and equipment 10 96.8 90.4 96.5
Right-of-use assets 11 19.1 20.9 21.3
Lease receivables 11 187.6 184.6 185.6
Trade and other receivables 3.5 13.4 3.4
Investments 15 10.2 11.0 11.3
Investments in associates and joint ventures 12 26.1 55.7 25.4
-------------------------------------------------- ----- --------- --------- -------------
373.0 410.5 373.5
-------------------------------------------------- ----- --------- --------- -------------
Current assets
Lease receivables 11 15.3 13.6 14.4
Inventories 8.0 8.5 11.6
Assets held for sale - - 32.9
Trade and other receivables 42.4 37.4 55.9
Deferred consideration receivable 0.3 1.5 0.3
Current tax assets 2.3 - 1.7
Cash and cash equivalents 19 37.0 40.0 30.4
-------------------------------------------------- ----- --------- --------- -------------
105.3 101.0 147.2
-------------------------------------------------- ----- --------- --------- -------------
Total assets 478.3 511.5 520.7
-------------------------------------------------- ----- --------- --------- -------------
Current liabilities
Lease liabilities 11 (20.4) (19.1) (20.0)
Trade and other payables (99.2) (87.4) (98.6)
Current tax liabilities - (1.3) -
Provisions (14.0) (0.3) (1.0)
Financial liabilities - share buyback obligation 14 (11.9) (3.7) (8.9)
-------------------------------------------------- ----- --------- --------- -------------
(145.5) (111.8) (128.5)
-------------------------------------------------- ----- --------- --------- -------------
Non-current liabilities
Lease liabilities 11 (203.8) (202.3) (203.4)
Trade and other payables (0.2) (0.3) (0.2)
Financial liabilities 14 (208.4) (276.4) (283.7)
Deferred tax liabilities (4.1) (1.5) (3.4)
Provisions (1.3) (14.8) (14.3)
-------------------------------------------------- ----- --------- --------- -------------
(417.8) (495.3) (505.0)
-------------------------------------------------- ----- --------- --------- -------------
Total liabilities (563.3) (607.1) (633.5)
-------------------------------------------------- ----- --------- --------- -------------
Net liabilities (85.0) (95.6) (112.8)
-------------------------------------------------- ----- --------- --------- -------------
Shareholders' equity
Called up share capital 2.2 2.2 2.2
Share premium account 49.6 49.6 49.6
Capital redemption reserve 0.5 0.5 0.5
Capital reserve - own shares (10.5) (6.9) (9.0)
Currency translation reserve (2.7) (0.8) 0.5
Accumulated losses (124.1) (140.2) (156.6)
-------------------------------------------------- ----- --------- --------- -------------
Total equity (85.0) (95.6) (112.8)
-------------------------------------------------- ----- --------- --------- -------------
Group statement of changes in equity
26 weeks ended 25 June 2023
Capital
Share Capital Reserve Currency Total
Share premium redemption - own translation Accumulated shareholders'
capital account reserve shares reserve losses equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ----- ---------- ---------- ------------ --------- ------------- ------------- ---------------
At 26 December
2021 2.3 49.6 0.5 (4.6) (1.0) (105.4) (58.6)
Profit for the
period - - - - - 42.1 42.1
Other
comprehensive
income
- exchange
differences - - - - 0.2 - 0.2
--------------- ----- ---------- ---------- ------------ --------- ------------- ------------- ---------------
Total
comprehensive
income for
the period - - - - 0.2 42.1 42.3
Proceeds from
share issues - - - 1.4 - - 1.4
Impairment of
share issues - - - 1.0 - (1.0) -
Share buybacks (0.1) - - (4.7) - (42.6) (47.4)
Share buyback
obligation
outstanding - - - - - (3.7) (3.7)
Share options
and LTIP
charge - - - - - 1.0 1.0
Tax on
employee
share options - - - - - (0.6) (0.6)
Equity
dividends
paid 9 - - - - - (30.0) (30.0)
--------------- ----- ---------- ---------- ------------ --------- ------------- ------------- ---------------
At 26 June
2022 2.2 49.6 0.5 (6.9) (0.8) (140.2) (95.6)
Profit for the
period - - - - - 39.5 39.5
Other
comprehensive
income
- exchange
differences - - - - 1.3 - 1.3
--------------- ----- ---------- ---------- ------------ --------- ------------- ------------- ---------------
Total
comprehensive
income for
the period - - - - 1.3 39.5 40.8
Proceeds from
share issues - - - 0.2 - - 0.2
Impairment of
share issues - - - 2.0 - (2.0) -
Share buybacks - - - (4.3) - (34.9) (39.2)
Share buyback
obligation
satisfied - - - - - 3.7 3.7
Share buyback
obligations
outstanding - - - - - (8.9) (8.9)
Share options
and LTIP
charge - - - - - 0.2 0.2
Tax on
employee
share options - - - - - (0.2) (0.2)
Equity
dividends
paid 9 - - - - - (13.8) (13.8)
--------------- ----- ---------- ---------- ------------ --------- ------------- ------------- ---------------
At 25 December
2022 2.2 49.6 0.5 (9.0) 0.5 (156.6) (112.8)
Profit for the
period - - - - - 80.2 80.2
Other
comprehensive
income
- exchange
differences - - - - (0.7) - (0.7)
- transferred
to income
statement on
disposal - - - - (2.5) - (2.5)
--------------- ----- ---------- ---------- ------------ --------- ------------- ------------- ---------------
Total
comprehensive
income for
the period - - - - (3.2) 80.2 77.0
Proceeds from - - - - - - -
share issues
Impairment of
share issues - - - 0.4 - (0.4) -
Share buybacks - - - (1.9) - (17.1) (19.0)
Share buyback
obligation
satisfied - - - - - 8.9 8.9
Share buyback
obligation
outstanding - - - - - (11.9) (11.9)
Share options
and LTIP
charge - - - - - 1.4 1.4
Tax on
employee
share options - - - - - (0.3) (0.3)
Equity
dividends
paid 9 - - - - - (28.3) (28.3)
--------------- ----- ---------- ---------- ------------ --------- ------------- ------------- ---------------
At 25 June
2023 2.2 49.6 0.5 (10.5) (2.7) (124.1) (85.0)
--------------- ----- ---------- ---------- ------------ --------- ------------- ------------- ---------------
Group cash flow statement
26 weeks ended 26 weeks ended 52 weeks ended
25 June 2023 26 June 2022* 25 December 2022*
Note GBPm GBPm GBPm
------------------------------------------------------------ ---- -------------- -------------- ------------------
Cash flows from operating activities
Profit before interest and taxation 99.1 54.8 109.8
Amortisation and depreciation 10.2 8.7 18.7
Impairment - - 1.6
Share of post-tax profits of associates and joint ventures 12 (1.7) (4.1) (6.6)
Profit on disposal of property, plant and equipment 10 (2.3) - -
Profit on disposal of associate 13 (40.6) - -
Profit on disposal of subsidiary - - (2.1)
Net gain on financial instruments at fair value through
profit or loss - (1.0) (1.0)
Share option and LTIP charge 1.4 1.0 1.2
Decrease in provisions (0.1) (0.1) (0.3)
Decrease/(increase) in inventories 3.6 2.5 (0.6)
Decrease/(increase) in receivables 3.9 (3.8) (13.3)
Increase/(decrease) in payables 2.7 (9.5) (3.6)
Cash generated from operations 76.2 48.5 103.8
UK Corporation tax paid (11.6) (9.3) (18.7)
Net cash generated by operating activities 64.6 39.2 85.1
------------------------------------------------------------ ---- -------------- -------------- ------------------
Cash flows from investing activities
Purchase of property, plant and equipment 10 (6.0) (2.5) (10.5)
Purchase of intangible assets 10 (5.3) (5.0) (9.2)
Proceeds from sale of property, plant and equipment 10 4.4 - -
Net consideration received on disposal of associate 13 70.6 - -
Net consideration (paid)/received on disposal of subsidiary - (1.2) 3.7
Consideration received on disposal of joint ventures - 1.8 3.3
Receipt from other financial assets - 8.6 8.6
Receipt of principal element on lease receivables 7.5 7.0 14.3
Receipt of interest element on lease receivables 6.1 6.2 12.4
Interest received 0.2 - 0.1
Other 19 11.1 4.7 6.8
Net cash generated by investing activities 88.6 19.6 29.5
------------------------------------------------------------ ---- -------------- -------------- ------------------
Cash inflow before financing 153.2 58.8 114.6
Cash flows from financing activities
Interest paid (7.3) (2.2) (4.9)
Share purchases 19 (19.0) (47.2) (86.5)
Consideration received on exercise of share options -
employee benefit trust - 1.4 1.6
New bank loans and facilities drawn down 28.0 60.0 365.8
Facility arrangement fees - - (3.2)
Repayment of borrowings (103.2) (26.7) (323.4)
Repayment of principal element on lease liabilities (10.0) (10.0) (19.3)
Repayment of interest element on lease liabilities (6.7) (7.0) (13.7)
Equity dividends paid (28.3) (30.0) (43.8)
Net cash used by financing activities (146.5) (61.7) (127.4)
------------------------------------------------------------ ---- -------------- -------------- ------------------
Net increase/(decrease) in cash and cash equivalents 6.7 (2.9) (12.8)
Cash and cash equivalents at beginning of period 30.4 42.8 42.8
Foreign exchange (loss)/gain on cash and cash equivalents (0.1) 0.1 0.4
------------------------------------------------------------ ---- -------------- -------------- ------------------
Cash and cash equivalents at end of period 19 37.0 40.0 30.4
------------------------------------------------------------ ---- -------------- -------------- ------------------
26 weeks ended 25 June 2023
*The Group has re-presented prior period comparatives. Refer to
note 2 for additional information.
Notes to the interim financial statements
26 weeks ended 25 June 2023
1. General information
Domino's Pizza Group plc ('the Company') is a public limited
company incorporated in the United Kingdom under the Companies Act
2006 (registration number 03853545). The Company is domiciled in
the United Kingdom and its registered address is 1 Thornbury, West
Ashland, Milton Keynes, MK6 4BB. The Company's ordinary shares are
listed on the Official List of the FCA and traded on the Main
Market of the London Stock Exchange. Further copies of the interim
report and Annual Report and Accounts may be obtained from the
address above.
2. Basis of preparation
The condensed consolidated interim financial statements (the
'interim financial statements') have been prepared in accordance
with the UK-adopted International Accounting Standard 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority. The financial information contained in this interim
report does not constitute statutory accounts within the meaning of
Section 434 of the Companies Act 2006.
The interim results for the 26 weeks ended 25 June 2023 and the
comparatives to 26 June 2022 are unaudited but have been reviewed
by the auditors. A copy of their review report has been included at
the end of this report.
The financial information for the 52 weeks ended 25 December
2022 has been extracted from the Group financial statements for
that period. These published financial statements were reported on
by the auditors without qualification or an emphasis of matter
reference and did not include a statement under section 498(2) or
(3) of the Companies Act 2006 and have been delivered to the
Registrar of Companies.
The interim financial information is presented in sterling and
all values are rounded to the nearest tenth of million pounds
(GBP0.1m), except when otherwise indicated. The accounting policies
are consistent with those of the previous financial year and
corresponding interim reporting period, except for the estimation
of income tax (see note 7). The financial statements are prepared
using the historical cost basis with the exception of the
derivative financial assets and contingent consideration which are
measured at fair value in accordance with IFRS 13 Fair Value
Measurement.
Re-presentation of comparatives in the Group Cash Flow
Statement
For the 26 weeks ended 26 June 2022, the disclosure of share
purchases and consideration received on exercise of share options
employee benefit trust has been re-presented to reflect separately
cash inflows and outflows on share repurchases.
In addition, for the 26 weeks ended 26 June 2022 and the 52
weeks ended 25 December 2022, the disclosure of the repayment on
lease liabilities and receipts on lease receivables has been
re-presented to reflect separately the principal and interest
elements.
Going concern
The interim financial information has been prepared on the going
concern basis. This is considered appropriate, given the financial
resources of the Group including the current position of banking
facilities, together with long-term contracts with its master
franchisor, its franchisees and its key suppliers.
The Directors of the Group have performed an assessment of the
overall position and future forecasts (including the 12 month
period from the date of this report) for the purpose of going
concern. The overall Group has seen strong performance in the first
half of 2023 with continued sales growth. Sales growth is primarily
driven by increases in food costs which have been passed through to
our franchisees. Benefits from sales growth have been partially
offset by interest charges incurred on our debt facilities and the
increase in the statutory tax rate to 25%.
The Directors of the Group have considered the future position
based on current trading and a number of potential downside
scenarios which may occur, either through reduced consumer
spending, reduced store growth, supply chain disruptions, general
economic uncertainty and other risks. This assessment has
considered the overall level of Group borrowings and covenant
requirements, the flexibility of the Group to react to changing
market conditions and ability to appropriately manage any business
risks. The Group has a GBP200m multicurrency syndicated revolving
credit facility of which GBP189.1m is undrawn, as well as GBP200m
private placement loan notes which expire in 2027. The Group has a
net debt position of GBP171.4m. The facility has leverage and
interest cover covenants, with which the Group have complied.
The scenarios modelled are based on our current forecast
projections out to the end of 2024 and have taken account of the
following risks: a downside impact of economic uncertainty and
other sales risks over the forecast period, reflected in sales
performance, with a c.5% reduction in LFL sales compared to budget;
the impact of a reduction of new store openings to half of their
forecast level; a further reduction of between 2.5%-3.0% in sales
to account for the potential impact of the public health debate;
future potential disruptions to supply chain through loss of one of
our supply chain centres impacting our ability to supply stores for
a period of two weeks; additional costs as a result of increase in
utility costs; the impact of a temporary loss of availability of
our eCommerce platform during peak trading periods; and a
significant unexpected increase in the impact of climate change on
our delivery costs. We have also considered a second 'severe but
plausible' scenario, which in addition to the above-mentioned
risks, also includes the risks of: a disruption to one of our key
suppliers impacting our supply chain over a period of four weeks
whilst alternate sourcing is secured; and the impact of fines from
a potential wider data breach.
In each of the scenarios modelled, there remains significant
headroom available on net debt. Under the first scenario there
remains sufficient headroom under the covenant requirements of the
facilities.
Notes to the interim financial statements (continued)
26 weeks ended 25 June 2023
2. Basis of preparation (continued)
Going concern (continued)
If all the risks under the first scenario were to occur
simultaneously with the additional risks in the second scenario,
before any mitigating actions, the Group would breach its leverage
covenants. The Board has a mitigating action available in the form
of delays in dividends to shareholders and share buybacks which
would prevent a breach of leverage covenants.
Based on this assessment, the Directors have formed a judgement
that there is a reasonable expectation the Group will have adequate
resources to continue in operational existence for the foreseeable
future.
Accounting policies and new standards
The consolidated accounts for the 26 weeks ended 25 June 2023
were prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. The accounting policies
applied by the Group are consistent with those disclosed in the
Group's Annual Report and Accounts for the 52 weeks ended 25
December 2022, except for the estimation of income tax. There were
no new standards and interpretations effective for the first time
for the reporting period that have a material impact on the Group
financial statements.
3. Segmental information
For management purposes, the Group is organised into two
geographical business units based on the operating models of the
regions: the UK & Ireland operating more mature markets with a
franchise model, limited corporate stores and investments held in
our franchisees, compared to International which operate
predominantly as corporate stores. The International segment
includes the German associate, legacy Germany and Switzerland
holding companies. These are considered the Group's operating
segments as the information provided to the Executive Directors of
the Board, who are considered to be the chief operating decision
makers, is based on these territories. The chief operating decision
makers review the segmental underlying EBIT and EBITDA results and
the non-underlying items separately. Revenue included in each
segment includes all sales made to franchise stores (royalties,
sales to franchisees and rental income) and by corporate stores
located in that segment.
At 25 June At 26 June At 25 December
2023 2022 2022
GBPm GBPm GBPm
--------------------------- ------------- ------------- -----------------
Current tax assets 2.3 - 1.7
Cash and cash equivalents 37.0 40.0 30.4
--------------------------- ------------- ------------- -----------------
Unallocated assets 39.3 40.0 32.1
--------------------------- ------------- ------------- -----------------
Current tax liabilities - 1.3 -
Deferred tax liabilities 4.1 1.5 3.4
Debt facilities 208.4 276.4 283.7
--------------------------- ------------- ------------- -----------------
Unallocated liabilities 212.5 279.2 287.1
--------------------------- ------------- ------------- -----------------
Unallocated assets include cash and cash equivalents and
taxation assets. Unallocated liabilities include the bank revolving
facility and taxation liabilities.
Segment assets and liabilities
26 weeks ended 25 26 weeks ended 25 June 52 weeks ended 25 December
June 2023 2022 2022
-------------------------------------------- -------------------------------------------- ----------------------------------------------
UK International
& International International UK & International International UK & International -
Ireland -continuing -discontinued Total Ireland -continuing -discontinued Total Ireland -continuing discontinued Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------ ------- ------------- ------------- ----- ------- ------------- ------------- ----- ------- ------------- ------------- -----
Segment
assets
Segment
current
assets 66.0 - - 66.0 61.0 - - 61.0 82.2 32.9 - 115.1
Segment
non-current
assets 336.7 - - 336.7 343.8 - - 343.8 336.8 - - 336.8
Investment
in
associates
and
joint
ventures 26.1 - - 26.1 24.9 30.8 - 55.7 25.4 - - 25.4
Investments 10.2 - - 10.2 11.0 - - 11.0 11.3 - - 11.3
Unallocated
assets 39.3 40.0 32.1
------------ ------- ------------- ------------- ----- ------- ------------- ------------- ----- ------- ------------- ------------- -----
Total assets 478.3 511.5 520.7
------------ ------- ------------- ------------- ----- ------- ------------- ------------- ----- ------- ------------- ------------- -----
Segment
liabilities
Liabilities 350.1 - 0.7 350.8 327.1 - 0.8 327.9 346.4 - - 346.4
Unallocated
liabilities 212.5 279.2 287.1
------------ ------- ------------- ------------- ----- ------- ------------- ------------- ----- ------- ------------- ------------- -----
Total
liabilities 563.3 607.1 633.5
------------ ------- ------------- ------------- ----- ------- ------------- ------------- ----- ------- ------------- ------------- -----
Notes to the interim financial statements (continued)
26 weeks ended 25 June 2023
Segmental performance for the 26 weeks 25 June 2023
UK & Ireland International Total underlying Non-underlying Total reported
GBPm GBPm GBPm GBPm GBPm
--------------------------------- ------------- --------------- ----------------- --------------- ---------------
Revenue
Sales to external customers 332.9 - 332.9 - 332.9
--------------------------------- ----------------- ---------------
Segment revenue 332.9 - 332.9 - 332.9
--------------------------------- ------------- --------------- ----------------- --------------- ---------------
Results
Underlying result before
associates and joint ventures 56.8 - 56.8 - 56.8
Share of profit of associates
and joint ventures 1.7 - 1.7 - 1.7
--------------------------------- ------------- --------------- ----------------- --------------- ---------------
Segment result 58.5 - 58.5 - 58.5
Other non-underlying items - - - 40.6 40.6
Profit before interest and
taxation 58.5 - 58.5 40.6 99.1
Net finance costs (7.6) - (7.6) - (7.6)
--------------------------------- ------------- --------------- ----------------- --------------- ---------------
Profit before taxation 50.9 - 50.9 40.6 91.5
Taxation (11.3) - (11.3) - (11.3)
--------------------------------- ------------- --------------- ----------------- --------------- ---------------
Profit for the year 39.6 - 39.6 40.6 80.2
--------------------------------- ------------- --------------- ----------------- --------------- ---------------
Effective tax rate 22.2% - 22.2% - 12.3%
--------------------------------- ------------- --------------- ----------------- --------------- ---------------
Other segment information
Depreciation 5.1 - 5.1 - 5.1
Amortisation 5.1 - 5.1 - 5.1
Total depreciation and
amortization 10.2 - 10.2 - 10.2
--------------------------------- ------------- --------------- ----------------- --------------- ---------------
EBITDA 68.7 - 68.7 40.6 109.3
Underlying EBITDA 68.7 - 68.7 - 68.7
Capital expenditure 11.3 - 11.3 - 11.3
Share-based payment charge 1.4 - 1.4 - 1.4
--------------------------------- ------------- --------------- ----------------- --------------- ---------------
Revenue disclosures
Royalties, franchise fees and
change of hands fees 40.8 - 40.8 - 40.8
Sales to franchisees 235.7 - 235.7 - 235.7
Corporate store income 16.4 - 16.4 - 16.4
Rental income on leasehold and
freehold property 1.1 - 1.1 - 1.1
National Advertising and
eCommerce income 38.9 - 38.9 - 38.9
--------------------------------- ------------- --------------- ----------------- --------------- ---------------
Total segment revenue 332.9 - 332.9 - 332.9
--------------------------------- ------------- --------------- ----------------- --------------- ---------------
Notes to the interim financial statements (continued)
26 weeks ended 25 June 2023
Segmental performance for the 26 weeks ended 26 June 2022
UK & Ireland International Total underlying Non-underlying Total reported
GBPm GBPm GBPm GBPm GBPm
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Revenue
Sales to external customers 278.3 - 278.3 - 278.3
---------------------------------- ----------------- ---------------
Segment revenue 278.3 - 278.3 - 278.3
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Results
Underlying result before
associates and joint ventures 50.7 - 50.7 - 50.7
Share of profit of associates and
joint ventures 2.3 1.8 4.1 - 4.1
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Segment result 53.0 1.8 54.8 - 54.8
Other non-underlying items - - - - -
Profit before interest and
taxation 53.0 1.8 54.8 - 54.8
Net finance costs (3.9) - (3.9) - (3.9)
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Profit before taxation 49.1 1.8 50.9 - 50.9
Taxation (8.8) - (8.8) - (8.8)
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Profit for the year 40.3 1.8 42.1 - 42.1
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Effective tax rate 17.9% - 17.3% - 17.3%
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Other segment information
Depreciation - Property, plant
and equipment 2.5 - 2.5 - 2.5
Depreciation - Right-of-use
assets 3.1 - 3.1 - 3.1
Amortisation 3.1 - 3.1 - 3.1
Total depreciation and
amortisation 8.7 - 8.7 - 8.7
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
EBITDA 61.7 1.8 63.5 - 63.5
Underlying EBITDA 61.7 1.8 63.5 - 63.5
Capital expenditure 7.5 - 7.5 - 7.5
Share-based payment charge 1.0 - 1.0 - 1.0
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Revenue disclosures
Royalties, franchise fees and
change of hands fees 37.8 - 37.8 - 37.8
Sales to franchisees 190.7 - 190.7 - 190.7
Corporate store income 17.6 - 17.6 - 17.6
Rental income on leasehold and
freehold property 0.3 - 0.3 - 0.3
National Advertising and
eCommerce income 31.9 - 31.9 - 31.9
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Total segment revenue 278.3 - 278.3 - 278.3
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Notes to the interim financial statements (continued)
26 weeks ended 25 June 2023
Segmental performance for the 52 weeks ended 25 December
2022
UK & Ireland International Total underlying Non-underlying Total reported
GBPm GBPm GBPm GBPm GBPm
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Revenue
Sales to external customers 600.3 - 600.3 - 600.3
---------------------------------- ----------------- ---------------
Segment revenue 600.3 - 600.3 - 600.3
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Results
Underlying result before
associates and joint ventures 102.2 - 102.2 - 102.2
Revaluation of investment 1.0 - 1.0 - 1.0
Share of profit of associates and
joint ventures 4.0 2.6 6.6 - 6.6
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Profit before interest and
taxation 107.2 2.6 109.8 - 109.8
Net finance costs (10.9) - (10.9) - (10.9)
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Profit before taxation 96.3 2.6 98.9 - 98.9
Taxation (17.3) - (17.3) - (17.3)
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Profit for the year 79.0 2.6 81.6 - 81.6
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Effective tax rate 18.0% - 17.5% - 17.5%
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Other segment information
Depreciation 10.9 - 10.9 - 10.9
Amortisation 7.8 - 7.8 - 7.8
Impairment 1.6 - 1.6 - 1.6
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Total depreciation, amortisation
and impairment 20.3 - 20.3 - 20.3
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
EBITDA 127.5 2.6 130.1 - 130.1
Underlying EBITDA 127.5 2.6 130.1 - 130.1
Capital expenditure 19.7 - 19.7 - 19.7
Share-based payment charge 1.2 - 1.2 - 1.2
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Revenue disclosures
Royalties, franchise fees and
change of hands fees 78.9 - 78.9 - 78.9
Sales to franchisees 411.4 - 411.4 - 411.4
Corporate store income 36.2 - 36.2 - 36.2
Rental income on leasehold and
freehold property 1.6 - 1.6 - 1.6
National Advertising and
eCommerce income 72.2 - 72.2 - 72.2
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Total segment revenue 600.3 - 600.3 - 600.3
---------------------------------- ------------- -------------- ----------------- --------------- ---------------
Notes to the interim financial statements (continued)
26 weeks ended 25 June 2023
4. Reconciliation of non-GAAP measures
In 2022, the Group decided to no longer classify items as
non-underlying, subject to any material provision reversals or
changes which are considered significant enough to consider
separate disclosure, such as material profit or loss from business
acquisitions or disposals, or material impacts from changes to
interpretation of accounting guidelines.
During the period, the Group disposed of its Investment in
Daytona JV Limited (refer to note 13), which generated a profit on
disposal of GBP40.6m, which is considered significant enough to
require separate disclosure. The profits arising from the disposal
have been treated as non-taxable on the basis the disposal falls
under the Substantial Shareholding Exemption.
26 weeks 26 weeks 52 weeks
ended ended ended
25 June 26 June 2022 25 December
2023 GBPm 2022
GBPm GBPm
-------------------------------------- --------- -------------- -------------
Underlying profit for the period 39.6 42.1 81.6
Non-underlying profit for the period 40.6 - -
-------------------------------------- --------- -------------- -------------
Profit for the period 80.2 42.1 81.6
-------------------------------------- --------- -------------- -------------
5. Finance income
26 weeks 26 weeks 52 weeks
ended ended ended
25 June 26 June 2022 25 December
2023 GBPm 2022
GBPm GBPm
------------------------------------------- --------- -------------- -------------
Other interest receivable 0.4 - 0.1
Interest on loans to associates and joint
ventures 0.1 0.2 0.3
Interest receivable on leases 6.1 6.2 12.4
Foreign exchange - - 0.3
------------------------------------------- --------- -------------- -------------
Total finance income 6.6 6.4 13.1
------------------------------------------- --------- -------------- -------------
6. Finance costs
26 weeks 26 weeks 52 weeks
ended ended ended
25 June 26 June 2022 25 December
2023 GBPm 2022
GBPm GBPm
---------------------------------- ------------------- ------------------- -------------
Debt facilities interest payable 7.4 3.3 10.3
Interest payable on leases 6.7 7.0 13.7
Foreign exchange 0.1 - -
Total finance costs 14.2 10.3 24.0
---------------------------------- ------------------- ------------------- -------------
Notes to the interim financial statements (continued)
26 weeks ended 25 June 2023
7. Taxation
Tax on profit
26 weeks 26 weeks 52 weeks
ended ended ended
25 June 26 June 2022 25 December
2023 GBPm 2022
GBPm GBPm
------------------------------------------ --------- -------------- -------------
Tax charged in the income statement
Current income tax:
UK corporation tax:
- current period 10.5 10.3 16.6
- adjustment in respect of prior periods (0.3) 0.1 (0.1)
------------------------------------------ --------- -------------- -------------
10.2 10.4 16.5
Income tax on overseas operations 0.6 0.4 0.9
------------------------------------------ --------- -------------- -------------
Total current income tax charge 10.8 10.8 17.4
------------------------------------------ --------- -------------- -------------
Deferred tax:
Origination and reversal of temporary
differences 0.4 (2.0) (0.3)
Effect of change in tax rate - - -
Adjustment in respect of prior periods 0.1 - 0.2
------------------------------------------ --------- -------------- -------------
Total deferred tax (charge)/credit 0.5 (2.0) (0.1)
------------------------------------------ --------- -------------- -------------
Tax charge in the income statement 11.3 8.8 17.3
------------------------------------------ --------- -------------- -------------
The tax charge in the income statement
is disclosed as follows:
Income tax charge 11.3 8.8 17.3
------------------------------------------ --------- -------------- -------------
Tax relating to items (charged)/credited
to equity
Reduction in current tax liability as
a result of the exercise
of share options (0.1) (0.1) 0.1
Origination and reversal of temporary
differences in relation
to unexercised share options (0.2) (0.5) (0.9)
------------------------------------------ --------- -------------- -------------
Tax charge in the Group statement of
changes in equity (0.3) (0.6) (0.8)
------------------------------------------ --------- -------------- -------------
There is no tax impact in relation to the foreign exchange
differences in the statement of comprehensive income as the profits
arising from the disposal of the Investment in Daytona JV have been
treated as non-taxable on the basis the disposal falls under the
Substantial Shareholding Exemption. The total effective tax rate is
12.3% (H1 22: 17.3%; FY 22: 17.5%).
Tax charged for the 26 weeks ended 25 June 2023 has been
calculated by applying the effective rate of tax per jurisdiction
to the underlying profit which is expected to apply to the Group
for the period ending 31 December 2023 using rates substantively
enacted by 25 June 2023 as required by IAS 34 'Interim Financial
Reporting'. Items of an exceptional nature have been assessed
independently.
8. Earnings per share
Basic earnings per share amounts are calculated by dividing
profit for the year attributable to ordinary equity holders of the
parent by the weighted average number of Ordinary shares
outstanding during the year.
Diluted earnings per share is calculated by dividing the profit
attributable to ordinary equity holders of the parent by the
weighted average number of Ordinary shares outstanding during the
year plus the weighted average number of Ordinary shares that would
have been issued on the conversion of all dilutive potential
Ordinary shares into Ordinary shares.
Earnings
26 weeks 26 weeks 52 weeks
ended ended ended
25 June 26 June 2022 25 December
2023 GBPm 2022
GBPm GBPm
--------------------------------- --------- -------------- -------------
Profit after tax for the period 80.2 42.1 81.6
Non-underlying items (40.6) - -
--------------------------------- --------- -------------- -------------
Underlying profit after tax 39.6 42.1 81.6
--------------------------------- --------- -------------- -------------
Notes to the interim financial statements (continued)
26 weeks ended 25 June 2023
8. Earnings per share (continued)
Weighted average number of shares
At At At
25 June 26 June 2022 25 December
2023 Number 2022
Number Number
------------------------------------------- ------------ -------------- -------------
Basic weighted average number of shares
(excluding treasury shares) 414,902,310 441,981,300 434,211,333
Dilutive effect of share options and
awards 2,526,493 2,481,473 1,826,246
------------------------------------------- ------------ -------------- -------------
Diluted weighted average number of shares 417,428,803 444,462,773 436,037,579
------------------------------------------- ------------ -------------- -------------
The performance conditions relating to share options granted
over 278,427 shares (H1 22: 1,455,554; FY 22: 1,040,013) have not
been met in the current financial period and therefore the dilutive
effect of the number of shares which would have been issued at the
period end has not been included in the diluted earnings per share
calculation.
There are no share options excluded from the diluted earnings
per share calculation because they would be antidilutive (2022:
nil).
26 weeks 52 weeks
ended 26 weeks ended
25 June ended 25 December
2023 26 June 2022 2022
------------------------------- --------- -------------- -------------
Earnings per share
Basic earnings per share 19.3p 9.5p 18.8p
Diluted earnings per share 19.2p 9.5p 18.7p
------------------------------- --------- -------------- -------------
Underlying earnings per share
Basic earnings per share 9.5p 9.5p 18.8p
Diluted earnings per share 9.5p 9.5p 18.7p
------------------------------- --------- -------------- -------------
9. Dividends
26 weeks 26 weeks 52 weeks
ended ended ended
25 June 26 June 2022 25 December
2023 GBPm 2022
GBPm GBPm
-------------------------------------- --------- -------------- -------------
Declared and paid during the period:
Final dividend for 2022: 6.8p (2021:
6.8p) 28.3 30.0 30.0
Interim dividend for 2022: 3.2p - - 13.8
-------------------------------------- --------- -------------- -------------
Dividends declared and paid 28.3 30.0 43.8
-------------------------------------- --------- -------------- -------------
The Directors have declared an interim dividend of 3.3p per
share. This dividend will be paid on 20 September 2023 to those
members on the register at the close of business on 11 August
2023.
10. Intangible assets and property, plant and equipment
During the 26 weeks ended 25 June 2023, the Group acquired
assets with a cost of GBP9.8m (cash outflow of GBP11.3m). The Group
disposed of freehold property during the period for GBP4.4m
resulting in a profit on disposal of GBP2.3m.
During the 26 weeks ended 26 June 2022, the Group acquired
assets with a cost of GBP7.4m (cash outflow of GBP7.5m). There were
no material disposals in the period.
As at 25 June 2023, amounts contracted for but not provided for
in the financial statements for the acquisition of property, plant
and equipment amounted to GBP0.2m and for intangible assets amount
to GBP1.1m for the Group.
Notes to the interim financial statements (continued)
26 weeks ended 25 June 2023
11. Right-of-use assets, lease receivables and lease
liabilities
Right-of-use assets
At At At
25 June 26 June 2022 25 December
2023 GBPm 2022
GBPm GBPm
----------- --------- -------------- -------------
Property 9.7 11.1 10.1
Equipment 9.4 9.8 11.2
----------- --------- -------------- -------------
19.1 20.9 21.3
----------- --------- -------------- -------------
Amounts recognised in the income statement
26 weeks 26 weeks 52 weeks
ended ended ended
25 June 26 June 2022 25 December
2023 GBPm 2022
GBPm GBPm
-------------------------- --------- -------------- -------------
Depreciation - Property 0.4 0.5 1.0
Depreciation - Equipment 2.3 2.6 4.9
2.7 3.1 5.9
-------------------------- --------- -------------- -------------
Lease receivables
At At At
25 June 26 June 2022 25 December
2023 GBPm 2022
GBPm GBPm
---------- --------- -------------- -------------
Property 202.9 198.2 200.0
202.9 198.2 200.0
---------- --------- -------------- -------------
Lease liabilities
At At At
25 June 26 June 2022 25 December
2023 GBPm 2022
GBPm GBPm
----------- --------- -------------- -------------
Property 214.3 211.4 212.0
Equipment 9.9 10.0 11.4
224.2 221.4 223.4
----------- --------- -------------- -------------
12. Investment in associates and joint ventures
At At At
25 June 26 June 2022 25 December
2023 GBPm 2022
GBPm GBPm
------------------------------------- --------- -------------- -------------
Investments in associates 21.5 51.0 20.8
Investments in joint ventures 4.6 4.7 4.6
Total investments in associates and
joint ventures 26.1 55.7 25.4
------------------------------------- --------- -------------- -------------
During the period, our Investment in Full House Restaurant
Holdings, contributed profits of GBP1.6m, along with paying a
dividend of GBP1.0m, whilst the Northern Ireland JV contributed
profits of GBP0.1m.
Notes to the interim financial statements (continued)
26 weeks ended 25 June 2023
13. Disposals
Investment in Daytona JV Limited
In June 2023, the Group disposed of its 33.3% interest in
Daytona JV Limited. The Group received GBP79.9m, of which GBP70.6m
related to the investment in Daytona JV limited and GBP9.3m related
to the repayment of the loan. Included in the cash received on
disposal is a GBP1.8m gain on a forward foreign currency contract
that was entered into to provide certainty to the Group over cash
flows received on disposal. The profit on disposal is analysed as
follows:
Daytona JV
Limited
GBPm
--------------------------------------------------------------- -----------
Cash received on disposal 70.6
Carrying amount of investment disposed (32.4)
Currency translation gain transferred from translation reserve 2.5
Profit on disposal before professional fees 40.7
Professional fees relating to the disposal (0.1)
----------------------------------------------------------------- -----------
Total profit on disposal of investment 40.6
----------------------------------------------------------------- -----------
The profits arising from the disposal have been treated as
non-taxable on the basis the disposal falls under the Substantial
Shareholding Exemption.
Corporate Stores - Have More Fun (London) Limited
On 30 November 2022, the Group disposed of its 100% interest in
Have More Fun (London), which operated in England, with net
consideration received from the buyers of GBP4.9m. The final
working capital adjustment is being finalised, and an additional
GBP0.3m is receivable from the purchaser. The profit on disposal of
the Group's interest in Have More Fun (London) is analysed as
follows:
Have More Fun (London) Limited
GBPm
----------------------------------------------- -------------------------------
Cash received on disposal 5.2
Cash disposed (0.3)
------------------------------------------------- -------------------------------
Net cash received on disposal 4.9
Consideration receivable post disposal 0.3
Net assets disposed excluding cash (see below) (2.8)
Profit on disposal before professional fees 2.4
Costs associated with disposal (0.3)
------------------------------------------------- -------------------------------
Total profit on disposal 2.1
------------------------------------------------- -------------------------------
Property, plant and equipment 0.2
Intangible assets 3.1
Right-of-use assets 1.6
Inventories, trade and other receivable and trade and other payables (0.2)
Lease liabilities (1.5)
Deferred tax liabilities (0.4)
----------------------------------------------------------------------- -----
Net assets disposed excluding cash 2.8
----------------------------------------------------------------------- -----
Notes to the interim financial statements (continued)
26 weeks ended 25 June 2023
14. Financial liabilities
Debt facilities
As at 25 June 2023 the Group had a total of GBP400m (H1 22:
GBP350m; FY 22: GBP400m) of banking facilities, of which GBP189.1m
(H1 22: GBP73.2m; FY 22: GBP113.4m) was undrawn.
At 27 July 2022, the Group's GBP350m multicurrency syndicated
revolving credit facility was replaced by a GBP200m multicurrency
revolving credit facility and GBP200m of US private placement
(USPP) loan notes. Arrangement fees of GBP1.9m and GBP1.3m were
incurred on the RCF and USPP respectively.
Bank revolving facility
The revolving credit facility has an original term of three
years to 27 July 2025 with the option of submitting two extension
notices to extend the facility twice, each by a period of 12
months. Arrangement fees of GBP1.5m (H1 22: GBP0.4m; FY 22:
GBP1.7m) directly incurred in relation to the RCF are included in
the carrying values of the facility and are being amortised over
the extended term of the facility.
Interest charged on the new revolving credit facility ranges
from 1.85% per annum above SONIA (or equivalent) when the Group's
leverage is less than 1:1 up to 2.85% per annum above SONIA for
leverage above 2.5:1. A further utilisation fee is charged if over
one-third is utilised at 0.15% which rises to 0.30% of the
outstanding loans if over two-thirds is drawn. In addition, a
commitment fee is calculated on undrawn amounts based on 35% of the
current applicable margin.
The RCF is secured by an unlimited cross guarantee between
Domino's Pizza Group plc, DPG Holdings Limited, Domino's Pizza UK
& Ireland Limited, DP Realty Limited, DP Pizza Limited, Sell
More Pizza Limited, Sheermans SS Limited and Sheermans Limited.
An ancillary overdraft and pooling arrangement was in place with
Barclays Bank Plc for GBP20.0m covering, Domino's Pizza Group plc,
DPG Holdings Limited, Domino's Pizza UK & Ireland Limited, DP
Realty Limited, DP Pizza Limited, Sell More Pizza Limited,
Sheermans SS Limited and Sheermans Limited. Interest is charged for
the overdraft at the same margin as applicable to the revolving
credit facility above SONIA.
Private placement loan notes
The US Private Placement notes mature on 27th July 2027 and
arrangement fees of GBP1.1m (FY 22: GBP1.2m) directly incurred in
relation to the USPP are included in the carrying values of the
facility and are being amortised over the term of the notes.
Interest charged on the US Private Placement notes is at 4.26%
per annum.
Share buyback obligation
On 4 May 2023, the Group entered into an irrevocable
non-discretionary programme with Numis Securities Limited to
purchase up to a maximum of GBP20.0m of shares from 5 May 2023.
During the period 3,007,441 shares were purchased for consideration
of GBP8.7m (GBP8.1m cash paid), which includes costs of GBP0.1m.
The remaining share buybacks outstanding as at 25 June 2023 is
recognised as a financial liability of GBP11.9m, which includes
GBP0.6m payable at the end of the period. During the period the
Group also concluded the share buyback programme entered into in
November 2022 with the purchase of 2,747,637 shares for
consideration of GBP9.0m, which includes GBP0.1m of costs.
15. Financial instruments
Investments
In November 2018, the Group acquired 15% of the issued share
capital of Shorecal Limited, a private company registered in the
Republic of Ireland that operates Domino's franchise stores in
Ireland. The Group's shareholding in Shorecal Limited is in
preference shares, acquired for an original cost of investment of
EUR12.2m (GBP11.0m). As a preference shareholder, the Group has
enhanced rights to dividend distributions and enhanced rights over
Shorecal Limited's equity value in the event of a liquidation or
onward share sale. The Group also has 'drag and tag' rights to
participate in an onward share sale arranged by Shorecal Limited's
other shareholders.
The investment in Shorecal Limited has been designated as a fair
value through profit and loss equity instrument, whereby dividends
received by the Group are recorded against the investment with any
fair value gains recognised in other income or losses recognised in
other expenses. The fair value of the investment is calculated by
discounting the future shareholder returns the Group expects to
receive from the investment, being proceeds from a liquidation or
onward share sale and dividends received up to that point. A
probability weighted expected return method has been applied in
performing this fair value calculation, whereby multiple future
outcomes for Shorecal Limited are simulated with a probability
assigned to each scenario.
Notes to the interim financial statements (continued)
26 weeks ended 25 June 2023
15. Financial instruments (continued)
The investment in Shorecal Limited is at Level 3 of the fair
value hierarchy because determining its fair value requires a
probability weighted estimate of future shareholder returns, which
is an unobservable fair value input.
During the period, we received dividends of EUR0.9m (GBP0.8m)
which have been credited to the investment value, and there has
been no fair value movement (H1 22: EUR1.2m increase (GBP1.0m); FY
22: EUR1.1m increase (GBP1.0m)). This, combined with a foreign
exchange decrease of GBP0.3m, brings the total valuation to
EUR11.9m (GBP10.2m). The fair valuation has been performed based on
current and expected forecast performance of the investment on a
probability weighted expected return approach. This considers the
potential future performance and potential dividend returns
together with assessments of likelihood of various exit
arrangements as structured under the shareholder agreement.
The key assumptions in the model are the scenario probabilities
applied, the year 1 budget EBITDA and the discount rate applied.
The post-tax discount rate applied is 7.96%. Sensitivity analysis
has been performed to highlight the impact of movements within the
key judgemental areas:
-- A 10% decrease in Year 1 EBITDA would lead to a EUR1.1m
(GBP1.0m) reduction in the valuation.
-- A 10% increase in Year 1 EBITDA would lead to a EUR1.0m
(GBP0.9m) increase in the valuation.
-- A 100bps increase in the discount rate would lead to a
EUR0.9m (GBP0.8m) decrease in the valuation.
-- A 100bps decrease in the discount rate would lead to a
EUR0.8m (GBP0.7m) increase in the valuation.
16. Share-based payments
The expense recognised for share-based payments in respect of
employee services received during the 26 weeks ended 25 June 2023
was GBP1.4m (H1 22: GBP1.0m; FY 22: GBP1.2m). This all arises on
equity-settled share-based payment transactions.
17. Related party transactions
During the period the Group entered into transactions, in the
ordinary course of business, with related parties. Transactions
entered into, and trading balances outstanding with related
parties, are as follows:
26 weeks 26 weeks 52 weeks
ended ended ended 25
25 June 26 June December
2023 2022 2022
GBPm GBPm GBPm
--------------------------------- --------- --------- ----------
Associates and Joint ventures
Sales to related parties 26.1 16.8 36.5
Amounts owed by related parties 2.4 1.3 1.8
Loans owed by related parties - 10.1 9.5
--------------------------------- --------- --------- ----------
18. Analysis of Net Debt
At As at
At 26 June 25 December
25 June 2023 2022 2022
GBPm GBPm GBPm
--------------------------------------- -------------- --------- -------------
Cash and cash equivalents 37.0 40.0 30.4
Debt facilities (210.9) (276.8) (286.6)
Capitalised facility arrangement fees 2.5 0.4 2.9
Net Debt (171.4) (236.4) (253.3)
--------------------------------------- -------------- --------- -------------
Of which:
Continuing operations (171.4) (237.1) (254.3)
Discontinued operations - 0.7 1.0
------------------------- -------- -------- --------
The Group's lease liabilities are not included in the Group's
definition of Net Debt. Lease liabilities are measured at the
present value of future lease payments, including variable lease
payments and the exercise price of purchase options where it is
reasonably certain that the option will be exercised, discounted
using the interest rate implicit in the lease, if readily
determinable, or alternatively the Group's incremental borrowing
rate as a lessee.
Notes to the interim financial statements (continued)
26 weeks ended 25 June 2023
19. Additional cash flow information
Other Cash flows from investing activities
26 weeks ended 26 weeks ended 52 weeks ended
25 June 2023 26 June 2022 25 December 2022
GBPm GBPm GBPm
------------------------------------------------------ -------------- -------------- -----------------
Dividends received from associates and joint ventures 1.0 1.7 2.9
Dividends received from investments 0.8 2.2 2.2
Decrease in loans to associates and joint ventures 9.3 0.8 1.7
------------------------------------------------------ -------------- -------------- -----------------
11.1 4.7 6.8
------------------------------------------------------ -------------- -------------- -----------------
Share transactions in cash flows from financing activities
26 weeks ended 26 weeks ended 52 weeks ended
25 June 2023 26 June 2022 25 December 2022
GBPm GBPm GBPm
------------------------------------------------------- --------------- --------------- ------------------
Purchase of own shares - share buyback (17.1) (42.5) (77.5)
Purchase of own shares - employee benefit trust (1.9) (4.7) (9.0)
Consideration received on exercise of share options -
employee benefit trust - 1.4 1.6
------------------------------------------------------- --------------- --------------- ------------------
(19.0) (45.8) (84.9)
------------------------------------------------------- --------------- --------------- ------------------
Reconciliation of free cash flow
26 weeks ended 26 weeks ended 52 weeks ended
25 June 2023 26 June 2022 25 December 2022
GBPm GBPm GBPm
------------------------------------------ --------------- --------------- ------------------
Cash generated from operating activities 64.6 39.2 85.1
Net interest paid (7.1) (2.2) (4.8)
Receipts on lease receivables 13.6 13.2 26.7
Repayment of lease liabilities (16.7) (17.0) (33.0)
Dividends received 1.8 3.8 5.1
Other - (0.2) (0.1)
------------------------------------------ --------------- --------------- ------------------
56.2 36.8 79.0
------------------------------------------ --------------- --------------- ------------------
Cash and cash equivalents
26 weeks ended 26 weeks ended 52 weeks ended
25 June 2023 26 June 2022 25 December 2022
GBPm GBPm GBPm
------------------------------- -------------- -------------- -----------------
Cash at bank and in hand 37.0 40.0 30.4
Total cash at bank and in hand 37.0 40.0 30.4
------------------------------- -------------- -------------- -----------------
Reconciliation of financing activities
At Exchange Non-cash At
25 December 2022 Net cash flow differences movements 25 June 2023
GBPm GBPm GBPm GBPm GBPm
------------------ ----------------- ------------- ------------ ---------- -------------
Debt facilities (283.7) 75.2 0.4 (0.3) (208.4)
Lease liabilities (223.4) 16.7 (0.4) (17.1) (224.2)
(507.1) 91.9 - (17.4) (432.6)
------------------ ----------------- ------------- ------------ ---------- -------------
Notes to the interim financial statements (continued)
26 weeks ended 25 June 2023
19. Additional cash flow information (continued)
Reconciliation of financing activities (continued)
At Exchange Non-cash At
26 December 2021 Net cash flow differences movements 26 June 2022
GBPm GBPm GBPm GBPm GBPm
------------------ ----------------- ------------- ------------ ---------- -------------
Debt facilities (242.5) (33.3) (0.2) (0.4) (276.4)
Lease liabilities (222.6) 17.0 (0.2) (15.6) (221.4)
(465.1) (16.3) (0.4) (16.0) (497.8)
------------------ ----------------- ------------- ------------ ---------- -------------
At Exchange Non-cash At
26 December 2021 Net cash flow differences movements 25 December 2022
GBPm GBPm GBPm GBPm GBPm
------------------ ----------------- ------------- ------------ ---------- -----------------
Debt facilities (242.5) (39.3) (0.8) (1.1) (283.7)
Lease liabilities (222.6) 33.0 (0.5) (33.3) (223.4)
(465.1) (6.3) (1.3) (34.4) (507.1)
------------------ ----------------- ------------- ------------ ---------- -----------------
20. Post balance sheet events
There were no significant events affecting the Group's business
since the balance sheet date.
21. Principal risks and uncertainties
Details of the principal risks and uncertainties facing the
Group, with the potential to materially impact the successful
delivery of our strategy, were set out on pages 55 to 60 of the
Domino's Pizza Group plc Annual Report and Accounts 2022. These
risks are summarised as follows: competitive pressures; franchisee
relationships; supply chain disruption (to either a key supplier or
at one of our SCCs); food safety; eCommerce and mobile platform
availability; loss of personal and corporate data; climate change;
public health debate; and people-related risks. The Executive Risk
Committee has continued to support an effective risk monitoring
process and has considered both the principal and any emerging
risks and uncertainties during the first 26 weeks of 2023.
The Directors believe that the principal risks being faced over
the remainder of the financial year are not substantially different
to those disclosed in the 2022 Annual Report, where we also
highlighted four specific short-term challenges: global
uncertainties arising from the military conflict in Ukraine,
leading to specific challenges over the availability of cereal
grains and oilseed products; a general risk of food commodity price
inflation; labour availability; and consequences on consumer
behaviour resulting from a reduction in discretionary income due to
cost-of-living increases.
We have successfully managed the availability of cereal grains
and oilseed products over the period and at the half-year end we
were able to offer 99.9% food availability. However, we continue to
recognise the uncertainty relating to the conflict in Ukraine and
are continuing to develop greater dual sourcing for critical
ingredients to provide greater resilience in the future. We have
experienced greater stability in pricing in the first half of 2023;
have maximised price certainty for all relevant food categories for
the remainder of 2023; and have further advanced forward buying for
2024, however we continue to remain vigilant on food price
inflation.
The impact of shortages in available labour at both our Support
Office and SCCs has become less acute as relevant labour markets
have stabilised; and as a result of hybrid working we have greater
access to talent in digital, marketing and technology in a wider
set of locations. We have also delivered centrally two very
successful national recruitment campaigns for the wider system,
which has helped to manage specific challenges over the recruitment
of store managers and delivery drivers, where competition has been
greatest. Whilst these measures continue to mitigate the risk
around labour availability where possible, this remains a
short-term challenge we continue to monitor.
Whilst there are some signs of improved consumer confidence
alongside greater stability in utilities costs, interest rates have
continued to rise in the first half of 2023 and the impact on
consumer behaviour continues to be closely monitored by the
business.
Alternative Performance Measures and Glossary
The performance of the Group is assessed using a number of
Alternative Performance Measures ('APMs'). The Group's results are
presented both before and after non-underlying items. Underlying
profitability measures are presented excluding non-underlying items
as we believe this provides both management and investors with
useful additional information about the Group's performance and
aids a more effective comparison of the Group's trading performance
from one period to the next and with similar businesses. Underlying
profitability measures are reconciled to unadjusted IFRS results on
the face of the income statement with details of non-underlying
items provided in note 4.
In addition, the Group's results are described using certain
other measures that are not defined under IFRS and are therefore
considered to be APMs. These measures are used by management to
monitor on-going business performance against both shorter term
budgets and forecast but also against the Group's longer term
strategic plans. The definition of each APM presented in this
report and, also, where a reconciliation to the nearest measure
prepared in accordance with IFRS can be found is shown below:
Location
of reconciliation
Item Definition to GAAP measure
Overall terminology
Non-underlying Items that are material in size, unusual or Group income
items infrequent in nature or discontinued operations statement,
and are disclosed separately as non-underlying note 4
items in the notes to the accounts.
Profit measures
Group operating Group operating profit before tax excluding Group income
profit before non-underlying items statement,
tax excluding note 3
non-underlying
items
Net interest Group finance costs excluding non-underlying Group income
before non-underlying items statement,
items note 3
Underlying profit Group profit before tax excluding non-underlying Group income
before taxation items statement,
note 3
Underlying profit Group profit after taxation excluding non-underlying Group income
for the period items statement
Earnings before EBIT is directly comparable to underlying operating Not applicable
Interest and profit
Tax (EBIT)
Non-underlying Items that are material in size, unusual or Group income
items infrequent in nature, and are disclosed separately statement,
as non-underlying items in the notes to the note 4
accounts.
Underlying basic Group EPS excluding non-underlying items Note 8
EPS
Last 12 months LTM EBITDA for the period from 27 June 2022 Not applicable
(LTM) EBITDA to 25 June 2023 based on underlying activities
including share of profits from associates and
joint ventures.
Revenue measures
System sales System sales represent the sum of all sales Not applicable
made by both franchised and corporate stores
to consumers.
Like-for-like LFL sales performance is calculated against Not applicable
(LFL) sales growth a comparable 26 week period in the prior year
excluding splits for mature stores opened which were not in territories
split in the year or comparable period. Mature
stores are defined as those open prior to 26(th)
December 2021.
Like-for-like LFL sales including splits performance is calculated Not applicable
(LFL) sales growth based on mature store growth and includes the
including splits impact in like for like results of those stores
which have been impacted by donating territory
to a new store.
Like-for-Like Like-for-like excluding splits and VAT system Not applicable
(LFL) system sales performance also includes the impact of
sales growth changes in the VAT applied on hot takeaway food
(excluding splits where the VAT inclusive price to customers did
& VAT) not change. The VAT rate in the UK decreased
from 20% to 5% on 15 July 2020, increased to
12.5% on 1 October 2021 and reverted back to
20% on 1 April 2022. System sales are consistently
reported on an exclusive of VAT basis. However,
where the inclusive of VAT price of an order
remained the same on a total basis to the customer,
over the reduced VAT period the exclusive of
VAT price reported in system sales increased.
This leads to an increase in system sales from
15 July 2020 through to 31 September 2021 when
the VAT rate reduced from 20% to 5%. From 1
October 2021, the rate increased from 5% to
12.5%. Where the inclusive of VAT price of an
order remained the same on a total basis, this
leads to a decrease in system sales compared
to the period from 15 July 2020 and an increase
in system sales compared to the period before
15 July 2020. With the increase in VAT from
1 April 2022 back up to 20%, where the inclusive
of VAT price remained the same to the consumer,
there has been a negative impact on system sales
compared to the period from 15 July 2020 - 31
September 2021 and 1 October 21 - 31 March 2022,
as the exclusive of VAT price of an order decreased.
As an example, for an order where the inclusive
of VAT price is GBP27:
* From 15 July 2020 to 31 September 2021, during the
period where VAT was 5%, the reported system sale
would be GBP25.71
* From 1 October 2021 to 31 March 2022, during the
period where VAT was 12.5%, the reported system sale
would be GBP24.00
* From 1 April 2022 onwards, where the VAT rate is 20%,
the reported system sale would be GBP22.50
In Ireland, the VAT rate for hot takeaway food
reduced from 13.5% to 9% on 1 November 2020
and remains in place.
The system sales figures adjusted for VAT removes
the impact on system sales of the lower VAT
rates in the comparative periods to provide
comparability. This is performed through adjusting
the comparative figures over the reduced VAT
period back to an equivalent system sales amount
based on a 20% VAT rate where applicable. Group
revenue is not significantly impacted by the
change in the VAT rate as the aforementioned
benefit only arose on hot takeaway food, and
therefore only impacts the sales on the corporate
stores revenue within overall Group revenue.
Cash flow measures
Net Debt Group cash less bank revolving credit facility Note 18
and other
Free cash flow Free cash flow comprises cash generated from Not applicable
operations less dividends received, net interest
cash flows and corporation tax. Free cash flow
before non-underlying cash items represents
the free cash flow before the inclusion of the
cash impact of items recognised as non-underlying.
Other non-financial definitions
Item Definition
AWUS Average Weekly Unit Sales
ASPA Average Sales Per Address
eCommerce fund The fund used to recharge costs for the development and
maintenance of our eCommerce platform with franchisees
German associate Represents our 33% associate investment in the trading
operations of Domino's Pizza Germany (also referred to
as Daytona JV) that was disposed of in the period.
HFSS High fat, salt, or sugar
International Represents our former businesses in Norway, Sweden, Iceland,
and Switzerland as well as our share of the German associate.
London corporate Relates to the corporate stores held following the acquisition
stores of Sell More Pizza Limited and subsequent corporate store
openings and closures
NAF National Advertising Fund
NI JV Represents our 46% associate investment in the trading
of operations of Victa DP Ltd (also referred to as Northern
Ireland JV).
Shorecal Represents our 15% interest in the trading operations
of Shorecal Limited, a franchisee group which operates
stores in the Republic of Ireland and Northern Ireland.
Responsibility statement
Each of the Directors, whose names and functions appear below,
confirm to the best of their knowledge that the condensed
consolidated interim financial statements have been prepared in
accordance with IAS 34, 'Interim Financial Reporting' as adopted by
the UK and that the interim management report herein includes a
fair review of the information required by the Disclosure and
Transparency Rules (DTR"), namely:
-- DTR 4.2.7 (R): an indication of important events that have
occurred during the 26 week period ended 25 June 2023 and their
impact on the condensed consolidated interim financial statements;
and a description of the principal risks and uncertainties for the
remaining 26 weeks of the financial year; and
-- DTR 4.2.8 (R): any related party transactions that have taken
place in the 26 week period ended 25 June 2023 that have materially
affected the financial position or performance of the enterprise
during that period; and any changes in the related party
transactions described in the last Annual Report that could do
so.
The Directors of Domino's Pizza Group plc as at the date of this
announcement are as set out below:
Matthew Shattock*, Chairman
Ian Bull*, Senior Independent Director
Elias Diaz Sese, Chief Executive Officer (interim)
Edward Jamieson, Chief Financial Officer
Natalia Barsegiyan*
Tracy Corrigan*
Stella David*
Lynn Fordham*
Usman Nabi*
*Non-executive Directors
A list of the current Directors is maintained on the Domino's
Pizza Group plc website at: corporate.dominos.co.uk.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial information differs from
the legislation in other jurisdictions.
This responsibility statement was approved by the Board of
Directors on 31 July 2023 and is signed on its behalf by Elias Diaz
Sese, Chief Executive Officer (interim).
By order of the Board
Elias Diaz Sese
Chief Executive Officer (interim)
31 July 2023
Independent review report to Domino's Pizza Group Plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Domino's Pizza Group Plc's condensed
consolidated interim financial statements (the "interim financial
statements") in the interim report of Domino's Pizza Group Plc for
the 26 week period ended 25 June 2023 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Group balance sheet as at 25 June 2023;
-- the Group income statement and Group statement of
comprehensive income for the period then ended;
-- the Group cash flow statement for the period then ended;
-- the Group statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim report
of Domino's Pizza Group Plc have been prepared in accordance with
UK adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with ISRE (UK) 2410.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim report, including the interim financial statements,
is the responsibility of, and has been approved by the directors.
The directors are responsible for preparing the interim report in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority. In
preparing the interim report, including the interim financial
statements, the directors are responsible for assessing the group's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the interim report based on our review. Our
conclusion, including our Conclusions relating to going concern, is
based on procedures that are less extensive than audit procedures,
as described in the Basis for conclusion paragraph of this report.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Birmingham
31 July 2023
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END
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